Best Home Improvement Loan Providers

Every homeowner is concerned about keeping their home in good condition. You might need to make minor or major repairs after bad weather or depreciation over time, want to add another room to your house, replace your aging A/C, or make other changes that would improve your home. These changes might even add value to your house, but in the meantime, you need a way to pay for them, and boy, can they be expensive. One way to cover the cost is to get a home improvement loan.

What is a Home Improvement Loan?

There are some misconceptions surrounding home improvement loans as many people confuse them with home equity loans or a home equity line of credit. Home equity loans, second mortgages, and mortgage refinancing are all different terms for a secured loan which uses your house as collateral. Home equity line of credit otherwise referred to as HELOC is similar in that your house serves as collateral on a flexible line of credit that you can draw on for any purpose.

In contrast, a home improvement loan is an unsecured personal loan that does not put your house at risk of repossession. It looks at your credit history and average income rather than the value of your home itself. A home improvement loan is restricted and can only be used to finance specific work on your house, while a home equity loan, mortgage, or HELOC uses your home as collateral but permits the money itself to be used however you’d like.

Should You Get a Home Improvement Loan?

Whether or not to get a home improvement loan depends on your circumstances. It's a good choice if you need to do only small repairs or changes that won't cost too much so that you can repay the loan quickly. If you'll need a longer period of time to repay a large amount, it's better to take a secured or long-term loan so you can access better interest rates. Home improvement loans don't come with high closing costs, which is especially important if you're only borrowing a relatively small amount.

Home improvement loans also make sense if you already have a large mortgage on your house or only bought it recently and can’t easily tap into the equity. They are good solutions for borrowers with good or excellent credit scores since the lender relies on your credit rating and average income to decide whether or not to make the loan and how much interest to charge you. Home improvement loans also have much faster approval times than secured loans, which can be the deciding factor if you need to urgently fix a leaky roof.

Getting a Home Improvement Loan: Know Your Renovation Needs

Before you apply for a home improvement loan, you need to be clear about your renovation needs. Loan providers who offer home improvement loans need to know your plans as accurately and in as much detail as possible. If you're putting a swimming pool, upgrading your ventilation system, or switching to green appliances, you’ll need to explain your intentions. Be prepared to outline your expected costs and show plans that indicate the work you’ll be doing (if it’s relevant). If it’s a more complex project, you’ll need to describe all the steps, share the timing of each, and give a breakdown of the costs. You’ll also be asked for at least one quote for the entire project.

Discover Your Options: What You Can Do with a Home Improvement Loan

A home improvement loan can be spent on anything that improves your home, but you'll need to be specific when you apply. Home improvement loans can be used for things like putting in a swimming pool, adding a room, upgrading your heating system to a more energy-efficient alternative, and storm-proofing the roof. You might find that you are restricted quite narrowly to the improvements that you describe in your application, so make sure that you include everything necessary when you apply for the loan.

Applying for a Renovation Loan

Only the actual homeowner can apply for a home renovation loan. If you own your home jointly with another person, both of you will have to complete the application. You’ll need to present the title deeds to the property, anything relating to your existing mortgage and proof of your income and current debts as well as a signed estimate (or more than one) from a company doing the work. Your credit score will be requested, and your financial history, average income, and loan to income ratio will all be checked out when you apply for a home improvement loan. The application process is usually quite straightforward and takes only a few days to get approval and have the money come through.

APR Rates

Average APR rates for home improvement loans are typically between 5% and 32%, lower than you'd have to pay if you used your credit card to finance the work. You'll generally get lower rates at traditional banks than with online lenders, usually maxing at around 20% APR. However, you'll have to deal with the inconvenience of going to the bank in person to apply and wait for longer for the loan to be approved. Interest rates are usually higher than those for home equity and HELOC loans since the loan is unsecured, but you'll be paying it off over a shorter period of time so you should accrue less interest overall.

The APR calculation on personal loans will vary depending on your lender but the APR on these loans is lower than what you would typically receive from a payday or short-term loan – usually starting at 10% and capping at 35.99%. It is not ideal to owe any money but if you require a loan, then a personal loan could certainly be a viable option.

APR rates mentioned include associated fees.

Full repayment for the loans displayed range between 61 days to 180 months.

Representative example: assuming a loan of $10,000 over 60 months at a fixed rate of 3.1% per annum and fees of $60.00. This would result in a representative rate of 3.3% APR, with monthly repayments of $180.80, for a total amount paid of $10,848.00.

Personal Loan Terms

As an unsecured loan, home improvement loan repayment terms usually extend over two to five years. This is far shorter than the repayment terms for secured home equity or second mortgage options, which tend to run to 20 or 30 years, and also less than the average ten-year term for HELOCs. You’ll usually be able to borrow a lower amount than through a home equity loan though, with maximum amounts averaging at $50,000 and rising to $100,000 with some lenders.

Before you take out a home improvement loan, remember that you’ll need to repay the amount within the term. Do your research carefully with our in-depth, objective reviews and estimate your costs carefully so that you don’t get taken by surprise.

* LightStream Terms and Conditions:

Your loan terms, including APR, may differ based on loan purpose, amount, term length, and your credit profile. Rate is quoted with AutoPay discount. AutoPay discount is only available prior to loan funding. Rates without AutoPay may be higher. Subject to credit approval. Conditions and limitations apply. Advertised rates and terms are subject to change without notice.

Payment example: Monthly payments for a $10,000 loan at 4.99% APR with a term of 3 years would result in 36 monthly payments of $299.66.

SunTrust now Truist is an Equal Housing Lender. © 2020 Truist Financial Corporation. SunTrust®, Truist, LightStream®, the LightStream logo, and the SunTrust logo are service marks of Truist Financial Corporation. All rights reserved. All other trademarks are the property of their respective owners. Lending services provided by SunTrust now Truist Bank.

*  Marcus By Goldman Sachs® Offer Terms and Conditions:

Your loan terms are not guaranteed and are subject to our verification of your identity and credit information. To obtain a loan, you must submit additional documentation including an application that may affect your credit score. The availability of a loan offer and the terms of your actual offer will vary due to a number of factors, including your loan purpose, our evaluation of your creditworthiness, your credit history, if we have recently declined your loan application and the number of loans you already have with us. To obtain a loan, you must submit additional documentation including an application that may affect your credit score. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans). Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your verifiable income must support your ability to repay your loan. Marcus by Goldman Sachs is a brand of Goldman Sachs Bank USA and all loans are issued by Goldman Sachs Bank USA, Salt Lake City Branch. Applications are subject to additional terms and conditions. You may be required to have some of your funds sent directly to creditors to pay down certain types of unsecured debt. Receive a 0.25% APR reduction when you enroll in AutoPay. This reduction will not be applied if AutoPay is not in effect. When enrolled, a larger portion of your monthly payment will be applied to your principal loan amount and less interest will accrue on your loan, which may result in a smaller final payment. See loan agreement for details.

* LendingClub Terms and Conditions:

A representative example of loan payment terms is as follows: you receive a loan of $13,411 for a term of 36 months, with an interest rate of 12.16% and a 5.30% origination fee of $711, for an APR of 15.99%. In this example, you will receive $12,700 and will make 36 monthly payments of $446.46. Loan amounts range from $1,000 to $40,000 and loan term lengths are 36 months or 60 months. Some amounts and term lengths may be unavailable in certain states. APR ranges from 8.05% to 35.89% and is determined at the time of application. Origination fee ranges from 3% to 6% of the loan amount. Lowest APR is available to borrowers with excellent credit. Advertised rates are subject to change without notice. Loans are made by LendingClub Bank, N.A., Member FDIC (“LendingClub Bank”), a wholly-owned subsidiary of LendingClub Corporation, NMLS ID 167439. Loans are subject to credit approval and sufficient investor commitment before they can be funded or issued. Certain information that we subsequently obtain as part of the application process (including but not limited to information in your consumer report, your income, the loan amount that your request, the purpose of your loan, and qualifying debt) will be considered and could affect your ability to obtain a loan from us. Loan closing is contingent on accepting all required agreements and disclosures at Lendingclub.com. “LendingClub” is a trademark of LendingClub Bank.

† Credible Terms and Conditions:

Credible is so confident in the personal loan rates you’ll find on Credible, we’ll give you $200 if you find and close with a better rate elsewhere. See full terms and conditions

‡ Upgrade Terms and Conditions:

Personal loans made through Upgrade feature Annual Percentage Rates (APRs) of 8.49%-35.99%. All personal loans have a 1.85% to 9.99% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. Loans feature repayment terms of 24 to 84 months. For example, if you receive a $10,000 loan with a 36-month term and a 17.59% APR (which includes a 13.94% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $341.48. Over the life of the loan, your payments would total $12,293.46. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Personal loans issued by Upgrade's bank partners. Information on Upgrade's bank partners can be found at https://www.upgrade.com/bank-partners/.

§ Figure Terms and Conditions:

Available APRs range from 8.25% to 16.45%. The advertised APR includes a 0.25% discount for enrolling in autopay as well as the payment of a higher origination fee in exchange for a reduced interest rate, which is not available to applicants or in all states. The lowest APRs are only available to the most qualified applicants, depending on credit profile and the state where the property is located, and those who also select five year loan terms; APRs will be higher for other applicants and those who select longer loan terms.

As representative example, for a borrower with a 60% CLTV and a 740 credit score who is eligible for and chooses to pay a 4.99% origination fee in exchange for a reduced APR on a five-year Figure Home Equity Line with an initial draw amount of $50,000 would have a fixed annual percentage rate (APR) of 8.21%. The total loan amount would be $52,495. Alternatively, a borrower with the same credit profile who pays a 3.99% origination fee would have an APR of 8.77% and a total loan amount of $51,995.

Your actual rate will depend on many factors such as your credit, combined loan-to-value ratio, loan term, occupancy status, and whether you are eligible for and choose to pay a higher origination fee in exchange for a lower rate. Rates change frequently so your exact APR will depend on the date you apply. APRs for home equity lines of credit do not include costs other than interest. Property insurance is required as a condition of the loan and flood insurance may be required if your property is located in a flood zone. For complete terms and conditions see https://figure.com/figure.com.

* SoFi Limited Offer Terms and Conditions: 

SoFi Checking and Savings is offered through SoFi Bank, N.A.  

Fixed rates from 7.99% APR to 23.43% APR APR reflect the 0.25% autopay discount and a 0.25% direct deposit discount. SoFi rate ranges are current as of 8/22/22 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, income, and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.

*  Reach Financial Terms and Conditions:

All loans are subject to eligibility criteria and review of creditworthiness and history. Terms and conditions apply. All loans advertised are unsecured personal loans issued by either Metabank® National association, member FDIC, or FinWise Bank, a Utah chartered commercial bank, member FDIC, as creditor, on the Liberty Lending platform. If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, and the loan term you select. Fixed Annual Percentage Rates (APR) range from 5.99% to 35.99%. You could receive a loan of $10,000 with an interest rate of 8.93%, an origination fee of $200, for an APR of 9.80%, which would result in total payment of $12,435 with 60 monthly payments of $207.20. Your actual rate may differ and depends on your credit history, loan amount, and term. Total approved loan amount reflects origination fee, which ranges from 0% to 5%. *Within 24 hours of your loan approval, loan proceeds will be available to pay the creditors named on your Truth-In-Lending Disclosure.