Home improvement loans help you finance updates and repairs that can add value and enjoyment to your home. Whether you’re considering a home improvement loan for an emergency expense or a backyard deck, you must first know how this type of loan works and then compare your options.

This home improvement loan guide covers everything from costs to loan types, qualification requirements and steps to choose the best lender for you.

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Homefinity launched in 2018 as the online lending division of Fairway Independent Mortgage. It offers a variety of mortgage products, including conventional mortgages, Federal Housing Administration and Veterans Affairs mortgages, and mortgage refinancing.

Pentagon Federal Credit Union, widely known as PenFed, offers borrowers access to many types of mortgages: conventional, adjustable rate, jumbo and Department of Veterans Affairs, plus refinancing loans and home equity lines of credit. The financial institution, which serves 2.5 million members, was established in 1935 and is based in McLean, Virginia.

North American Savings Bank, or NASB, is a Missouri-based bank and lender founded in 1927 that offers home mortgages nationally. NASB provides a variety of mortgage options, including conventional, Federal Housing Administration and Department of Veterans Affairs loans, and products for borrowers who might otherwise have trouble getting a mortgage.

Headquartered in Charlotte, North Carolina, Truist Bank was formed in 2019 after SunTrust and BB&T banks merged. Truist Bank offers a variety of mortgage products, including refinancing and home equity lines of credit.

Chase, one of the world’s largest banks, was founded in 1799 in New York and offers fixed-rate, refinance and other mortgage loans.

Simmons Bank was founded in Arkansas in 1903 and can now be found across six states. It offers mortgage products such as conventional and jumbo loans, federal-government-backed loans and state-approved down payment assistance programs.

PNC Bank is one of the largest banks in the United States, serving more than 9 million customers in all 50 states. A full-service mortgage lender, PNC offers most mortgage loan product types.

SoFi is an online lender founded in 2011 and headquartered in San Francisco that offers fixed-rate mortgages. Refinance, jumbo and home equity loans are also available.

CMG Financial, a trade name of CMG Mortgage Inc., is a privately-held mortgage banking firm operating nationwide and based in San Ramon, California. Founded in 1993, the lender offers a range of products, including conventional, government and specialty mortgages, like jumbo loans.

LightStream

APR 7.99% to 23.99%
Max. Loan Amount $100,000
Min. Credit Score Not disclosed

Upstart

APR 6.50% to 35.99%
Max. Loan Amount $50,000
Min. Credit Score 300

Happy Money

APR 8.99% to 29.99%
Max. Loan Amount $40,000
Min. Credit Score Not disclosed

Rocket Loans

APR 8.42% to 29.99%
Max. Loan Amount $45,000
Min. Credit Score Not disclosed

Avant

APR 9.95% to 35.95%
Max. Loan Amount $35,000
Min. Credit Score Not disclosed

SoFi

APR 7.99% to 23.43%
Max. Loan Amount $100,000
Min. Credit Score Not disclosed

Best Egg

APR 8.99% to 35.99%
Max. Loan Amount $50,000
Min. Credit Score Not disclosed

LendingClub

APR 8.05% to 36.00%
Max. Loan Amount $40,000
Min. Credit Score Not disclosed
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Min. Credit Score

7.99% to 23.99% $100,000 Not disclosed

7.74% to 17.99% $50,000 650

6.50% to 35.99% $50,000 300

8.99% to 29.99% $40,000 Not disclosed

8.42% to 29.99% $45,000 Not disclosed

9.95% to 35.95% $35,000 Not disclosed

6.99% to 24.99% $40,000 660

7.99% to 23.43% $100,000 Not disclosed

8.99% to 35.99% $50,000 Not disclosed

8.05% to 36.00% $40,000 Not disclosed

LightStream is the online consumer lending division of Truist, which formed in 2019 from the merger of BB&T and SunTrust. SunTrust acquired the assets of online lender FirstAgain in 2012 and relaunched the business as LightStream. LightStream’s online personal loans range from $5,000 to $100,000 and can be used for nearly any reason. Personal loans are available to borrowers nationwide with good to excellent credit.

Although PenFed Credit Union – officially Pentagon Federal Credit Union – serves members of the armed forces, military associations, veterans and retirees, and their families, a military connection is not required to become a member. The credit union offers personal loans for eligible members and eligible co-borrowers in all 50 states, as well as in Guam, Puerto Rico and Okinawa, Japan.

Upstart is a lending platform that uses artificial intelligence to improve access to affordable credit. Based in California and founded by former Google employees in 2012, Upstart also applies AI to reduce lending risks and costs for its bank partners. The lending intermediary provides unsecured personal loans from $1,000 to $50,000 to borrowers anywhere in the U.S. except West Virginia or Iowa.

Happy Money offers Payoff personal loans designed to consolidate credit card debt. It operates in all but two states and provides loans of up to $40,000. Happy Money is not a bank and instead works with lending partners that originate the loans. The California-based financial wellness company takes a psychological approach to money matters.

Rocket Loans offers personal loans to qualified borrowers in all 50 states. These loans are designed for people with fair to excellent credit who need to borrow up to $45,000 for debt consolidation, home improvements, medical expenses and business or other expenses.

Chicago-based Avant has lent more than $6.5 billion to borrowers since its 2012 founding. In partnership with WebBank, Avant offers secured and unsecured personal loans and a credit card. The online lender helps borrowers with fair to excellent credit, or average scores from 600 to 800.

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Marcus is the consumer bank and lending arm of investment bank Goldman Sachs. Established in 2016, the lender offers personal loans of up to $40,000.

SoFi, short for Social Finance, offers personal loans of up to $100,000 to borrowers with very good to excellent credit. The nationwide lender was founded in 2011 and is known for offering loans with no fees. In addition to personal loans, SoFi offers student loans, auto and student loan refinancing, home loans, and small-business financing.

Best Egg is an online lender founded in 2014 that financial technology company Marlette Holdings Inc. owns and operates. Best Egg offers personal loans starting at $2,000 that can be used to cover medical bills, home remodeling and a variety of other expenses. Cross River Bank in New Jersey issues Best Egg loans, which can be funded in as little as one business day.

LendingClub connects borrowers and investors through its online marketplace. LendingClub originated on Facebook and evolved into an extensive peer-to-peer lender, though it no longer offers peer-to-peer loans. Borrowers in all U.S. states can apply for $1,000 to $40,000 loans with LendingClub.

A home improvement loan is financing you use to pay for home repairs and enhancements. When you get a home improvement loan, you use the loan funds to pay your contractor or buy supplies to complete the work, then pay the loan off over time. A home improvement loan is helpful if you don’t have cash to pay upfront for home improvement expenses.

Home equity loans and personal loans are the most common types of home improvement loans, but there are other options, such as cash-out refinancing. Banks, credit unions and online lenders may offer home improvement loans.

The type of loan you choose will depend in large part on the scale of your home improvement project. Here are four types of home improvement loans and an overview of each one:

A home equity loan is a second mortgage from a bank, credit union or other lender enabling you to borrow against the equity in your home. Lenders usually limit you to borrowing 80% to 85% of your home’s value. You will repay the balance with equal monthly payments over a fixed term, in addition to your original mortgage. Learn more about the best home equity loans.

  • Pro: A single lump-sum loan amount gives you the ability to tackle major projects, plus interest rates are low.
  • Con: Qualification is more involved and includes a home appraisal.
  • Best for: people with a clear home improvement plan and budget.

A cash-out refinance replaces your mortgage with a new home loan for more money than you owe on the original mortgage, giving you the difference in cash. You’ll access your equity to get cash at closing, which you can use to make home improvements. Lenders may allow you to draw out up to 80% of your home’s value. Your refinanced home loan will have a new balance, payment, interest rate and repayment terms. Most cash-out refinances have fixed interest rates. Learn more about the best mortgage refinance lenders.

  • Pro: You can lower your interest rate while tapping your home’s equity.
  • Con: With your home as collateral, you risk losing it if you fail to make payments.
  • Best for: people who have built a lot of equity and plan to stay in their home for a while.

Home Equity Line of Credit

A HELOC is like a credit card because it allows you to draw funds as needed up to a limit and then repay them at a variable interest rate. HELOCs are typically limited to 85% of the equity of your home. Learn more about how to compare home equity loans and HELOCs.

  • Pro: Only borrow exactly what you need.
  • Con: With variable interest rates, loans could be more costly than expected.
  • Best for: people who aren’t sure what the final construction bill will be.

Using a personal loan for home improvement is like getting any unsecured loan. It’s not secured by your home, and your home improvement loan rate depends on your creditworthiness. Personal loans are usually available with fixed interest rates and in amounts from $1,000 to $100,000. Because a personal loan is unsecured, it will have a higher interest rate than a loan secured by your home. Learn more about the best personal loans.

  • Pro: You can qualify even if you don’t have significant equity in your home.
  • Con: Interest rates are higher than for collateral loans.
  • Best for: people who don’t need a lot of cash.

The average HELOC rate for loans with a 10-year repayment period is currently at 7.37%, which is up 0.12 percentage points from last week. The rate on a 20-year HELOC is at 7.92%, up 0.12 percentage points from last week. On a 30-year HELOC, the rate is 6.94%, up 0.15 percentage points from last week.

This analysis is powered by Bankrate, which gathers data from applicants who prequalify for HELOCs through its website and affiliates.

  • Finance updates and repairs that add value to your home.
  • Avoid draining cash reserves.
  • Pay off improvements over time.
  • Choose from a number of loan options to fit the scale of your project.

  • You increase your debt.
  • You may need to put down collateral, which you could risk losing if you can’t repay the loan.
  • You could pay a high APR for a personal loan, depending on your credit.

  1. Consider your eligibility. Home improvement lenders typically have minimum credit score requirements to be approved for a home improvement loan. Generally, you’ll need at least a 620 FICO credit score to be approved for a home improvement loan. Review your credit report to check for errors, and work on paying down debt before you apply for a home improvement loan.
  2. Determine how much you need to borrow. Consider your home improvement project amount and leave room for error. Don’t take out a property improvement loan that strains your finances just to make cosmetic improvements.
  3. Determine your preferred loan term. Consider your budget and how quickly you can pay off the loan. A long-term home equity loan could make sense if you’re financing a room addition or new roof. But a 30-year loan isn’t a good choice for minor repairs that you may need to repeat before you’re done paying for them.
  4. Prequalify. Lenders use a soft credit pull to check your odds of qualifying and to estimate loan rates and terms. You can prequalify with multiple lenders, but first verify that the lender is only performing a soft credit check to avoid credit damage.
  5. Make your selection. Run the numbers for the loan options you are considering, weighing convenience against cost. Choose a loan and finalize details such as the loan amount. With personal loans, you can get funds as fast as the next business day after you accept the loan terms. With other home improvement loans, the timeline is much longer: A cash-out refinance can take up to 45 days.

  1. Eligibility requirements: Find out the lender’s minimum qualifications and prequalify to check your odds of approval.
  2. Loan amounts: All home equity loans have maximum loan-to-value amounts.
  3. APR: Compare home improvement rates by getting prequalified rate quotes. Be sure you’re comparing apples to apples when you consider loan APRs and fees.
  4. Customer service: Read lender reviews, and search the Better Business Bureau and Consumer Financial Protection Bureau Consumer Complaint Database to learn about the customer service you can expect from a home improvement lender.

Yes, borrowers can find a number of alternatives beyond personal loans and home equity loans, such as the:

  • 203(k) loan: Backed by the Federal Housing Administration, a 203(k) loan finances the home and the cost of repairs and upgrades in one loan.
  • Title I loan: This Department of Housing and Urban Development-backed loan finances property improvements and renovations and is capped at $25,000.
  • Home construction loan: A home construction loan covers the cost of building a home or a major renovation and is paid to the contractor.
  • Renovation loan: Some lenders give loans based on the future value of your home, after you make the improvements. These loans are best for homeowners who haven’t built much equity yet.

A home improvement loan may be difficult to get with bad credit. Most lenders require a credit score of at least 620, and a FICO score below 580 is considered poor.

The federally backed 203(k) loan may be one option for a bad credit home improvement loan. Borrowers need a minimum credit score of 500 with a 10% down payment or a score of at least 580 with a 3.5% down payment.

U.S. News selects the Best Loan Companies by evaluating affordability, borrower eligibility criteria and customer service. Those with the highest overall scores are considered the best lenders.

To calculate each score, we use data about the lender and its loan offerings, giving greater weight to factors that matter most to borrowers. For mortgage lenders, we take into account each company’s customer service ratings, interest rates, loan product availability, minimum down payment, minimum FICO score and online features.

The weight each scoring factor receives is based on a nationwide survey on what borrowers look for in a lender.

To receive a rating, lenders must offer qualifying loans nationwide and have a good reputation within the industry. Read more about our methodology.

To recap, here are the picks:

Best Home Improvement Loans of 2023

Alliant Credit Union is a not-for-profit financial cooperative that serves customers in all 50 states. Alliant offers products such as conventional, jumbo, refinancing and home equity line of credit loans, but specific mortgage products may not be available in certain states.

Bank of America serves roughly 67 million customers in all 50 states. The lender offers conventional, Federal Housing Administration, Department of Veterans Affairs and jumbo loans as well as home equity lines of credit and mortgage refinancing.

Guaranteed Rate, founded in 2000 and based in Chicago, offers mortgage options including conventional loans, Federal Housing Administration loans, jumbo loans and interest-only loans to customers in all 50 states and Washington, D.C. Borrowers can take advantage of specialized loan products and Guaranteed Rate’s online application, documentation and loan payment options.

U.S. Bank is a national bank based in Minneapolis that provides various banking products and services as well as a handful of mortgage options. The lender offers conventional loans, Federal Housing Administration loans, Department of Veterans Affairs loans, jumbo loans and more.

Discover is a major credit card issuer, but its financial products and services go beyond that. In addition to credit cards and banking, Discover offers mortgage refinance and home equity loans to qualified borrowers. You can use the money from a home equity loan for many purposes, including making home improvements, consolidating debt or paying for other major expenses.

Spring EQ, founded in 2016, is a Philadelphia-based mortgage lender that specializes in home equity loans and operates in 39 states and Washington, D.C. The technology-based loan originator, which plans to expand into more states, also provides home purchase, rate-and-term refinance, and cash-out refinance loans. Spring EQ’s digital process can streamline borrowing and help people get their money in as little as 11 days.

Flagstar offers banking and loan products to borrowers in all 50 states. Borrowers can obtain mortgage and home equity products including conventional loans, Federal Housing Administration loans, Veterans Affairs loans, U.S. Department of Agriculture loans, adjustable-rate mortgages, and home equity loans and lines of credit.

Advertising Disclosure: Some of the loan offers on this site are from companies
who are advertising clients of U.S. News. Advertising considerations may impact
where offers appear on the site but do not affect any editorial decisions,
such as which loan products we write about and how we evaluate them. This site
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