7 Best Home Improvement Loans

A home improvement loan can be a convenient way to finance your home remodel or repairs, without having to put up collateral or tap into your home equity. Many of these types of loans feature competitive rates, flexible terms, fast funding and little to no fees.

Read on for our picks of the best home improvement loan providers and a comprehensive guide to help you choose the right one for you.

Our Top Picks for Best Home Improvement Loans

• LightStream - Best Overall
• SoFi - Best for Unemployment Protection
• Discover - Best for Minor Home Repairs
• Marcus by Goldman Sachs - Best Flexible Terms
• PenFed Credit Union - Best for Small Loans
• U.S. Bank - Best for Small Loans Runner-Up
• Navy Federal Credit Union - Best for Military

Best Home Improvement Loan Reviews

Why we chose this company: LightStream offers the best overall home improvement loan options because it features competitive low interest rates, large loan amounts, long-term financing and charges no loan fees.

LightStream, an online division of Truist Bank, offers some of the lowest rates for home improvement loans in the market and longer than average repayment periods.

You can borrow anywhere between $5,000 and $100,000 and choose a repayment period of up to 12 years. APRs start at 4.99% to 16.99% with AutoPay, though in some states the maximum rate can go all the way up to 20.49%.

LightStream offers a 0.50% rate discount when you enroll in AutoPay. It also offers another great perk: if you’re approved for an unsecured loan by a competing lender at a lower rate than Lightstream offered, the company will offer a rate 0.10% below what the competitor offered..

Applying and checking estimated monthly payments is quite simple on LigthStream’s platform. You can also apply through LightStream’s mobile app, which you can later use to monitor account balances and make payments.

Same-day funding is available as long as you sign your loan agreement and complete the final verification process before 2:30 p.m. EST Monday through Friday.

Why we chose this company: SoFi lets you apply for forbearance and modify monthly payments if you were to lose your job, and could even help you find new employment — features not many competitors offer.

Founded in 2011, SoFi started as a private student loan lender and only offered options meant to fund education and/or refinance student loans. With time, the company has expanded its services to include mortgage loans, auto refinance, online banking, investing solutions and personal loans.

Home improvement loans range between $5,000 to $100,000 with repayment periods of up to seven years. APRs range from 7.99% to 23.43% with a 0.25% interest rate discount, if you enroll in AutoPay.

Like most lenders, SoFi’s home improvement loans are unsecured. You don’t need any home equity or collateral to get approved. You don’t need to pay loan-related fees either since SoFi doesn’t charge origination fees, closing costs or prepayment penalties on any of its personal loans. In addition, there are no charges for late payments.

SoFi stands out for its unemployment protection benefits. If for some reason you lose your job, you may apply for forbearance — a temporary postponement of your loan payments — in increments of three months and up to 12 months, provided that you’ve applied for or are receiving unemployment compensation. During this period, SoFi will also assist you in finding new employment.

SoFi’s application process is completely online. Same-day funding is also available for most loan applications as long as you sign before 7:00 p.m. EST, Monday through Friday. Note that loans over $20,000, however, may undergo a longer review process and take about one business day to be funded.

Why we chose this company: Discover offers the best home improvement loan option for customers who need quick funding for minor repairs and renovations of up to $35,000.

Online bank Discover is widely known for offering credit cards, student loans, personal loans and other banking services to customers in all 50 states.

You can borrow anywhere from $2,500 to $40,000 and choose fixed monthly payments between 36 to 84 months. Interest rates range from 5.99% to 24.99%. Although Discover’s APRs are sometimes higher than some competitors in our list, its rates are still highly competitive compared to several lenders, some of which offer a whopping 35.99% maximum interest rate.

Discover offers some attractive perks as well. It doesn’t charge loan origination fees or a penalty for paying your loan early. In fact, if you pay your loan back within the first 30 days, you don’t have to pay any interest either.

Discover also offers free online protection which helps remove your personal information from people-search websites, such as Spokeo, YellowPages and TruthFinder. This feature can be activated on the Discover mobile app once you become a customer.

To be eligible for a Discover home improvement loan, you must be a U.S. citizen and have a minimum household income of $25,000. In addition, you must provide tax information, employment history and personal documents.

Loan approval decisions are typically sent the same day after submitting your complete application and funding is available within one business day. Funds requested via check may take up to seven days.

Why we chose this company: We chose Marcus by Goldman Sachs as the best home improvement loan lender for flexible terms because it lets borrowers defer payments and change due dates.

Marcus by Goldman Sachs offers fixed-rate home improvement loans of up to $40,000 with repayment terms from three to six years. Current interest rates range from 6.99% to 24.99%

Where Marcus really stands out is on its perks. You don’t have to pay any loan fees, this means that there are no origination fees, late fees, prepayment penalties or sign-up fees.

In addition, Marcus offers on-time payment rewards, a feature that lets you defer one payment after you make 12 consecutive monthly payments on time. You can also change your loan due date up to three times during the life of the loan.

Although Marcus doesn’t charge a fixed late fee like most competitors, your loan does accrue interest during the additional days it takes you to pay. As of this writing, Marcus is only accepting online applications for personal loans if you have an invitation code.

Read Marcus by Goldman Sachs Personal Loans Review >>>

Why we chose this company: We chose PenFed Credit Union as the best for small loans because it grants loans in amounts as low as $600.

Pentagon Federal, commonly known as PenFed, offers extremely competitive rates on all its financial products, including its personal loans for home improvements.

PenFed’s home improvement loans feature fixed rates from 7.74% to 17.99% and repayment terms of up to 60 months (five years). Loan amounts are available from $600 up to $50,000, which makes it a good option for borrowing small amounts and funding minor projects.

Similarly to other lenders in our list, PenFed doesn’t charge an origination fee or a penalty for paying off your loan ahead of time. However, it does charge a $29 fee for late payments.

With PenFed, you can add a co-applicant and file a joint application. Adding a co-signer — someone that shares repayment responsibility with you — can often lead to better rates and a higher loan amount if your FICO score is on the lower end.

PenFed lets you check your rate without commitment and it just performs a soft pull of your credit, which shouldn’t affect your credit score. Although you don’t need to be a current member to check your rate or apply, you must become one if you decide to get the loan. To become a member you need to open a savings account with at least $5.

Funding is typically available as soon as the next business day for PenFed account holders. However, direct deposit and ACH funding may take up to two business days, while checks can take between 5 and 7 days. The waiting period may vary depending on your financial institution and the time of day your loan is processed.

Why we chose this company: U.S. Bank is our runner-up for small loans because it offers loans as low as $1,000.

U.S. Bank offers unsecured personal loans for home improvement and, like most lenders, doesn’t require collateral, appraisals or home inspections. It also doesn’t charge an origination fee or a penalty for paying off the loan ahead of time.

U.S. Bank home improvement loans are available from $1,000 to $25,000 for non-customers and up to $50,000 for current U.S. Bank customers. Repayment terms start from 12 to 84 months for current customers and up to 60 months for customers who don’t have a U.S. Bank checking account. Interest rates range from 8.99% to 21.49% based on your creditworthiness.

You can easily check your estimated rate on the U.S. Bank website without impacting your credit. However, only current U.S. Bank customers can apply and close their loan entirely online. If you don’t have a qualifying U.S. Bank checking or savings account you may need to close the loan by visiting a local branch.

A credit score of 660 or more is preferred. You also need to provide evidence of your home address, employment information and personal documentation, such as your Social Security number and ID.

Electronic funding may be available within a few hours or one business day after approval for U.S. Bank account holders. However, funding to external accounts may take up to four days.

Why we chose this company: Navy Federal Credit Union offers competitive rates and longer than average repayment terms for military members and their families.

Navy Federal Credit Union stands out for catering competitive financial products for military members and their family. Available for members in all 50 states, the credit union offers personal loans for home improvement from upwards $25,000 and with no origination fees.

Navy Federal minimum interest rates vary depending on the length of the loan. Loans with terms of up to 36 months have a starting interest rate of 7.49%, Those with terms of 37 to 60 months and 61 to 180 months start at 14.79% and 15.29%, respectively.

To apply for a loan, you or an immediate family member must be an active member, retiree or veteran of the U.S. Armed Forces or work at the Department of Defense. Some non-immediate family members, such as grandparents, aunts and uncles, may also apply. You also need to submit documents such as employer’s information, income, Social Security number and your contact information.

According to Navy Federal, same-day funding is available. However, in some cases, it may take up to 24 hours.

Other companies we considered

The following companies were also considered, but didn’t make our final cut.

Wells Fargo

Wells Fargo is a well-known lender that offers rates starting at 5.99% and loan amounts from $3,000 up to $100,000. However, its loans cater exclusively to existing customers. If you’re not a current Wells Fargo customer with a qualifying checking account you can’t apply for a loan online or get a rate discount. Non-customers must apply in one of Wells Fargo branches, which are only available in 37 states.

Best Egg

Best Egg’s loans are capped at $50,000 with repayment terms from three to five years. Its maximum APR of 35.99% is higher than what the top lenders in our list offer. In addition, it charges an origination fee of up to 8.99%.

TD Bank

TD Bank offers loan amounts from $2,000 to $50,000 with rates starting at 6.99% to 21.99%. In addition, it charges no origination fees or prepayment penalties. Its main drawback is its limited availability, currently in 16 states: Connecticut, New Jersey, Delaware, New York, Washington, North Carolina, South Carolina, Florida, Pennsylvania, Maine, Rhode Island, Massachusetts, Vermont, New Hampshire and Virginia. Despite this, TD Bank remains a competitive lender. If you live in any of these states, it may be an option worth considering.

Lending Club

Lending Club is an online lender that offers fixed-rate home improvement loans up to $40,000 and monthly payment of three to five years. In addition, Lending Club accepts joint loan applications, as such it can be an option for borrowers with less-than-stellar credit. However, it charges a high origination fee of between 2% to 6% and a maximum APR of 36%.

OneMain Financial

OneMain Financial loan amounts range from $1,500 to $20,000 with term lengths of up to five years. Loans don’t have early payment fees and can be applied for with a co-borrower. However, loans have a low maximum loan amount of only $20,000. and APRs starting at 18%, which is considerably higher than most lenders. In addition, OneMain Financial charges an origination fee of up to 10% and in some instances, might require collateral such as your vehicle.

Upgrade

Upgrade offers loans from $1,000 and up to $50,000 with flexible term lengths between two and seven years, and no prepayment penalties or fees. However, loans have origination fees ranging from 1.85% to 9.99%, which is considerably higher than our top picks. Upgrade also features higher APRs with a maximum rate of 35.99%. As for all lenders, its rates vary depending on the creditworthiness of the borrower, total loan amount and length of the loan.

Best Home Improvement Loans Guide

Read on to find out more about home improvement loans, how they work and other types of loans you can use to finance major home projects.

We also discuss key factors to consider when choosing and applying for a home improvement loan.

What are home improvement loans?

A home improvement loan is a type of unsecured personal loan that can be used to finance home renovations, repairs and upgrades. This type of loan is usually a good option for homeowners who need fast funding, but don't want to put their home as collateral.

Generally, lenders offer loan amounts of up to $100,000 and let you choose fixed repayment periods from one to seven years.

Because home improvement loans are unsecured, interest rates tend to be higher than those of secured loans. For instance, interest rates for home improvement loans range between 4% to 36%, whereas home equity loans interest rates range from 4% to 13%.

It’s worth noting that the term “home improvement loan” doesn’t only refer to personal loans. It also includes other types of loans that are typically used for home improvements, such as cash-out refinancing, home equity loans, home equity lines of credit and FHA 203(k) loans.

How do home improvement loans work?

A loan for home improvement lets you borrow a lump-sum to cover costly home repairs, such as a kitchen remodel, without needing to put up collateral, home equity, appraisals or a home title.

In most cases, the process consists of these three steps:

1. Prequalify and apply online.

Many lenders let you apply for prequalification online. This can give you an idea of the interest rate, length terms and loan amount you’re likely to be approved for with a particular lender. This process involves a soft credit inquiry, which doesn’t impact your credit score. Based on your prequalification, you can decide whether you want to submit your application. In most cases, you’ll receive a loan decision response the same day or within a business day.

2. Sign your loan agreement.

If approved, you’ll receive a loan agreement which you can typically sign electronically.

3. Receive your money.

Once everything is processed, you’re done. The funds are deposited into your account within a few business days (or the same day) and you can immediately use them to pay for your project.

After receiving the funds, you start paying the loan back in fixed monthly installments. You only pay interest on the full loan amount. However, depending on the lender, you may also pay an origination fee of between 1% to 10% of your loan amount. This fee is typically deducted from your proceeds.

Other types of home improvement loans

There are multiple types of loans you can use to pay home repairs and remodeling projects. The most common financing options include home equity loans, home equity lines of credit, cash-out refinance loans, FHA 203(k) loans, personal loans and credit cards.

The best option for you will typically depend on your credit worthiness, the scale of your home improvement project and — if you choose a secured loan — whether you have enough equity to put your home up as collateral.

Here’s an overview of what each type of home improvement loan offers:

• Home equity loans: A home equity loan, also known as a second mortgage, is a secured loan that lets you borrow a lump sum against your home equity. Equity is the difference between your mortgage balance and your home’s current market value. Home equity loans have fixed interest rates and loan terms. Typically, you can borrow up to 90% of the property’s value and choose repayment options of up to 30 years. Some of the best home equity loan lenders offer highly competitive rates, starting at around 4%.

• Home equity lines of credit: A home equity line of credit, or HELOC, is similar to a home equity loan with the difference that instead of getting a lump sum you get access to a credit line from which you can withdraw money as needed. Unlike home equity loans, HELOCs have variable interest rates, meaning that monthly payments fluctuate over time. Additionally, HELOCs often have a 10-year draw period and a 20-year repayment term. This makes them a good option for long-term projects.

• Cash-out refinance: A cash-out refinance is a loan that replaces your current mortgage with a new and larger mortgage. Basically, part of the money is used to pay off your remaining mortgage balance and the difference can be used for discretionary expenses such as home renovations. Cash-out refis can be great options if the new loan offers better interest rates than your current mortgage. However, do note that your maximum loan amount will depend on how much equity you have available. Most lenders require you to leave at least 20% of equity available, meaning you can borrow up to 80% of your home’s value.

• FHA 203(k) loan: An FHA 203(k) loan, or rehab loan, is a loan backed by the Federal Housing Administration. This type of loan allows home buyers to combine the costs of purchasing a fixer-upper and the expenses associated with its repairs into one loan. FHA 203(k) loans can have fixed and adjustable-rates and repayment terms of 15 and 30 years.

• Personal loans: A personal loan is an unsecured loan that can be used for debt consolidation or to finance a wide variety of things, such as vacations, medical expenses and home remodeling. Because these loans don’t require collateral, lenders tend to have a stricter underwriting process, using borrowers' creditworthiness and credit history to assess risk and determine interest rates. As with most financial products, borrowers with good to excellent credit scores have greater chances of getting lower rates. Personal loans for home improvements are typically approved and funded faster than other loan products and have lower loan costs than home equity loans, which require closing costs and appraisals. Home improvement loans also have fixed-interest rates and monthly payment plans of up to seven years.

• Credit cards: A credit card can also be an alternative to pay for smaller, less expensive projects. Some of the best credit cards offer 0% APR for the first year and introductory cash-back bonuses when you spend a certain amount within the first few months of opening an account. If you commit to paying your entire balance during the introductory period, you can avoid paying interest and even save some money through cash back offers.

How to find the best home improvement loans

Here are some factors to consider when shopping for a home improvement loan:

1. Determine how much you need to borrow.

If possible, get a few quotes from contractors in your area. This will help you have an accurate idea of how much your home improvement project will cost and how much money you’ll need to borrow.

2. Check your credit score.

Most financial institutions require a minimum credit score of at least 620 to be approved for a home improvement loan. They also offer their best interest rates to borrowers with good credit. Before applying, review your credit report and make sure there aren’t any errors. If you have outstanding debts, focus on paying them down first, so you can improve your chances of approval and get lower interest rates when you do apply.

3. Compare lenders’ products and eligibility requirements.

Not all lenders offer the same loan options. For instance, most lenders cap loan amounts at $50,000 and typically offer loan terms of up to five and six years. Others may let you borrow up to $100,000 and offer repayment terms of up to seven years, with very few offering up to 15 years. Approval and funding times also vary. In most cases, funding takes between one to two business days after being approved. Some, however, may offer same-day funding.

4. Consider loan APRs and fees.

Most lenders let you prequalify and check your rate online by performing a soft inquiry (or pull) on your credit. Get prequalified with multiple lenders and compare your estimated rate and loan offers before applying. Just make sure the bank doesn't do a hard inquiry on your credit since this can temporarily damage your score. Similarly, check and compare loan-related fees. Many lenders charge origination fees that can go up to 10% of your loan proceeds. Some may also charge application fees and prepayment penalties. If possible, choose a bank that doesn’t charge any of these fees.

5. Evaluate customer support options.

Look for a bank that offers multiple forms of customer support, including phone and online support. Many banks feature online portals as well, which let you track your loan status during the application process, and make online payments afterwards. You may also search for third-party ratings, such as the Better Business Bureau’s, to read customer reviews and complaints, which will give you a glimpse of what you can expect as a customer.

How to apply for a home improvement loan

Applying for a home improvement loan is quite simple. Many traditional and online lenders let you apply completely online. Generally, you can get a prequalification, check your estimated rate and loan offer within minutes completely online. Once you get prequalified, you can decide whether you want to start the application process.

To apply you typically need to provide:

• Personal information: Social Security Number, citizenship status, date of birth, email address, permanent address, phone number

• Employment information: Employment status, employer name, work phone number, monthly income, mortgage payment

• Supporting documents: W2s, paystubs, tax returns, utility bills, driver’s license

Once you submit the loan application, lenders send a notification letting you know if you’ve been approved. Depending on the lender, this can take between a few hours to one business day. You should then receive your funds within one or two business days, sometimes even the same day, if the lender offers this option.

Home improvement loan rates

Interest rates for home improvement loans range from 7.99% up to 35.99%. Most lenders determine your rate by looking at your credit score and credit usage, as well as your debt-to-income and payment-to-income ratios.

Although personal loans for home improvement have somewhat higher rates than home equity loans and cash-out refinance loans (which have rates ranging from around 4% up to 13%) there’s no need to risk your home by putting up as collateral, which is a definite benefit.

How to get a home improvement loan with bad credit

Getting a loan with bad credit may be difficult, but it isn’t altogether impossible. Although most lenders ask for a FICO credit score of 620 or more, there are lenders that cater to consumers with lower scores, albeit at a higher interest rate.

Some of the best bad credit loan lenders let you add a co-signer to your loan, which might help you get a lower interest rate, or offer loans guaranteed by an asset, such as your home, car or a savings account. Other lenders consider alternative factors such as your job and educational background in addition to your credit history to determine your loan offer.

Here are a few tips on how to get a home improvement loan if you have bad credit:

• Work on your credit. Check your score and see what you can do to improve it. Many apps let you keep track of your credit score on a daily basis, and sometimes even provide tips on how to improve your credit. As a good rule of thumb, making on-time payments, paying more than the monthly minimum on your credit cards and lowering your credit utilization rate to under 30% can help you increase your score within a few months.

• Get a co-signer or co-borrower. Adding someone with a higher income or better credit score to your loan application may help you get a reduced APR.

• Compare lenders’ offerings. As with any other type of loan, take your time to compare what lenders have to offer. Although most lenders offer higher interest rates for borrowers with poor or fair credit, rates may still vary from lender to lender.

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How We Evaluated the Best Home Improvement Loans

We rounded up the best home improvement loans based on the following factors:

• Loan options: We compared loan amount range, repayment terms and eligibility requirements amongst lenders. We also checked whether co-borrowers or joint applications are accepted. We favored those that offer flexible terms and high loan maximums.

• Interest rates: We looked for lenders offering competitive rates, rate discounts and options to check your estimated rate online.

• Fees and penalties: We preferred lenders that offer no-fee loans, especially those that don’t charge origination fees, prepayment penalties and late fees.

• Funding times: Lenders that offer same-day funding were favored over those with longer funding periods.

• Ease of application: We evaluated each lender’s online features, such as the options to prequalify and apply completely online.

• Customer support: We checked for consumers’ complaints filed with the Consumer Financial Protection Bureau (CFPB) database and the Better Business Bureau (BBB). We also made sure lenders offered multiple forms of customer support, such as via phone and online, and that their contact information was easily available.

Summary of Money’s Best Home Improvement Loans Review

• LightStream - Best Overall
• SoFi - Best for Unemployment Protection
• Discover - Best for Minor Home Repairs
• Marcus by Goldman Sachs - Best Flexible Terms
• PenFed Credit Union - Best for Small Loans
• U.S. Bank - Best for Small Loans Runner-Up
• Navy Federal Credit Union - Best for Military