Best Home Improvement Loans Of January 2023

Best Home Improvement Loans Of January 2023

by Home Improvement

Whether you’ve recently bought a house and want to make some adjustments or have been a homeowner for quite some time and think you’re long overdue for some renovations, you’ll want to make sure you have the financial means to take on such project.

Home improvement costs can vary depending on what part of the home you’re fixing, but according to Rocket Mortgage, Americans spend an average of $15,000 on a single home improvement project.

If you don’t have the savings to float your entire improvement project, you might consider applying for a personal loan since it can be used for a variety of expenses and typically carry lower interest rates compared to credit cards. Personal loans must be paid back in regular increments over a set period of time. The longer your loan term, the lower your monthly payments will be but the more you’ll pay in interest charges over that duration.

Select rounded up six of the best personal loan lenders to consider if you need to finance a home improvement project. When compiling our list of the best personal loans, Select evaluated dozens of lenders. We looked at key factors like interest rates, fees, loan amounts and term lengths offered, plus other features including how your funds are distributed, autopay discounts, customer service and how fast you can get your funds. (Read more about our methodology below.)

The best home improvement loans

Subscribe to the Select Newsletter!

Our best selections in your inbox. Shopping recommendations that help upgrade your life, delivered weekly. Sign-up here.

Best overall

LightStream Personal Loans

  • Annual Percentage Rate (APR)

    5.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 23.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}* when you sign up for autopay

  • Loan purpose

    Debt consolidation, home improvement, auto financing, medical expenses, wedding and others

  • Loan amounts

  • Terms

  • Credit needed

  • Origination fee

  • Early payoff penalty

  • Late fee

Pros

  • Same-day funding available through ACH or wire transfer
  • Loan amounts up to $100,000
  • No origination fees, no early payoff fees, no late fees
  • LightStream plants a tree for every loan

Cons

  • Requires several years of credit history
  • No option to pay your creditors directly
  • Not available for student loans or business loans
  • No option for pre-approval on website (but pre-qualification is available on some third-party lending platforms)

Who’s this for? LightStream stands out for offering loans with some of the lowest interest rates and providing loans for nearly every purpose except for higher education and small business. In other words, home improvements are fair game for the use of these funds.

It offers the longest-term option among the lenders on this list, which typically means lower monthly payments, and less pressure when repaying debt. On the flip side, a longer term also means you’ll accrue more interest charges over the long run.

LightStream does not charge any origination fees, administration fees or early payoff fees. All these points make this lender an appealing option for those who want to score an interest rate that’s as low as possible and achieve a monthly payment that’s as low as possible.

Best for borrowing smaller amounts

PenFed Personal Loans

  • Annual Percentage Rate (APR)

  • Loan purpose

    Debt consolidation, home improvement, medical expenses, auto financing and more

  • Loan amounts

  • Terms

  • Credit needed

  • Origination fee

  • Early payoff penalty

  • Late fee

Pros

  • Credit union membership available to anyone
  • Loans as low as $600
  • Can pick up a physical at a branch
  • May apply with a co-borrower

Cons

  • Funds come as a physical check
  • Must be a member to get funds (no membership needed to apply)
  • Must pay for expedited shipping to get your funds next day
  • Maximum loan amount of $50,000
  • Late fee of $29

Who’s this for? PenFed offers loans of as little as $600, making it ideal for those who may not necessarily need a massive home improvement undertaking but just need a little extra cash for a smaller fix.

Note that this lender is a credit union. While you don’t need to be a member to apply, you will need to sign up for a PenFed membership and keep $5 in a qualifying savings account to receive your funds.

Also, PenFed provides its funds in the form of a paper check. If you live near a PenFed location, you can pick up your check at any time directly from the bank. Otherwise, you can receive your funds as early as the next day if you pay for expedited shipping.

Best for lower credit scores

Upstart Personal Loans

  • Annual Percentage Rate (APR)

  • Loan purpose

    Debt consolidation, credit card refinancing, home improvement, wedding, moving or medical

  • Loan amounts

  • Terms

  • Credit needed

    Credit score of 300 on at least one credit report (but will accept applicants whose credit history is so insufficient they don’t have a credit score)

  • Origination fee

    0{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 10{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of the target amount

  • Early payoff penalty

  • Late fee

    The greater of 5{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of last amount due or $15, whichever is greater

Pros

  • Open to borrowers with fair credit (minimum 300 score)
  • Will accept applicants who have insufficient credit history and don’t have a credit score
  • No early payoff fees
  • 99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of personal loan funds are sent the next business day after completing required paperwork before 5 p.m. Monday through Friday

Cons

  • High late fees
  • Origination fee of 0{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 10{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of the target amount (automatically withheld from the loan before it’s delivered to you)
  • $10 fee to request paper copies of loan agreement (no fee for eSigned virtual copies)
  • Must have a Social Security number

Who’s this for? If you need to make home improvements but worry that a low credit score would disqualify you from many loans, the good news is that Upstart offers you an option for funding. This lender is ideal for individuals with a low credit score or even no credit history. It considers factors like education, employment, credit history and work experience.

Term lengths are a bit limited, though, compared to other more flexible options; you can choose either a three-year or five-year loan. Borrowers can apply for as little as $1,000 and as much as $50,000.

There are a few fees to be aware of with this loan. Upstart charges an origination fee of up to 10{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of the loan amount, as well as late fees, but no early payoff fee.

Best for flexible repayment terms

Marcus by Goldman Sachs Personal Loans

  • Annual Percentage Rate (APR)

    6.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 24.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} APR when you sign up for autopay

  • Loan purpose

    Debt consolidation, home improvement, wedding, moving and relocation or vacation

  • Loan amounts

  • Terms

  • Credit needed

  • Origination fee

  • Early payoff penalty

  • Late fee

Pros

  • No origination fees, no early payoff fees, no late fees
  • Will send direct payment to up to 10 creditors (for debt consolidation)
  • Monthly VantageScore updates
  • Earn a one-month payment vacation (interest-free) after making 12 on-time consecutive payments
  • Ability to choose your due date when you accept the loan (and again up to two more times after that)

Cons

  • Does not accept joint applications and/or co-signers
  • Not the fastest funding (can take a week or 10 business days)
  • Slightly tougher approval requirements (especially for larger loans/lower interest)

Who’s this for? A Marcus by Goldman Sachs Personal Loan is a good choice if you’re looking for a no-fee personal loan that gives you some flexibility when it comes to making payments. Borrowers can earn a one-month payment vacation (interest-free) after making 12 on-time consecutive payments. This can be a welcomed reprieve for some borrowers.

This lender also gives you the ability to choose your payment due date when you accept the loan (and again up to two more times after that). This way, you can select a due date that works best with your payment schedule and other expenses.

The maximum funding amount is slightly lower than the maximum from some other lenders: Borrowers can apply for up to $40,000. This may not be a dealbreaker for those who have more modest home improvement undertakings, but if you have a renovation project that’s going to cost significantly more, you might want to consider other lenders.

Best for long repayment terms

SoFi Personal Loans

  • Annual Percentage Rate (APR)

    7.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 23.43{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} when you sign up for autopay

  • Loan purpose

    Debt consolidation/refinancing, home improvement, relocation assistance or medical expenses

  • Loan amounts

  • Terms

  • Credit needed

  • Origination fee

  • Early payoff penalty

  • Late fee

Pros

  • No origination fees, no early payoff fees, no late fees
  • Unemployment protection if you lose your job
  • DACA recipients can apply with a creditworthy co-borrower who is a U.S. citizen/permanent resident by calling 877-936-2269
  • Can have more than one SoFi loan at a time (state-permitting) 
  • May accept offer of employment (to start within the next 90 days) as proof of income
  • Co-applicants may apply

Cons

  • Applicants who are U.S. visa holders must have more than two years remaining on visa to be eligible
  • No co-signers allowed (co-applicants only)

Who’s this for? SoFi offers personal loan amounts up to $100,000, making it ideal for those who have more costly, higher-lift home improvement projects to take on. But this lender also offers repayment terms that are longer compared to those of most other lenders: Borrowers have 24 to 84 months to pay back the loan.

Most other personal loans come with a fixed interest rate but SoFi gives borrowers the option to choose between a fixed and variable APR. Variable rates can go up and down over the lifetime of your loan, which means you could potentially save if the APR goes down (but it’s important to remember that the APR can also go up). However, fixed rates guarantee you’ll have the same monthly payment for the duration of the loan’s term, which makes it easier to budget for repayment.

SoFi also provides a 0.25{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} discount on your APR if you set up automatic electronic monthly payments.

Best for fast funding

Discover Personal Loans

  • Annual Percentage Rate (APR)

  • Loan purpose

    Debt consolidation, home improvement, wedding or vacation

  • Loan amounts

  • Terms

    36, 48, 60, 72 and 84 months

  • Credit needed

  • Origination fee

  • Early payoff penalty

  • Late fee

Pros

  • No origination fees, no early payoff fees
  • Same-day decision (in most cases)
  • Option to pay creditors directly
  • 7 different payment options from mailing a check to pay by phone or app

Cons

  • Late fee of $39
  • No autopay discount
  • No cosigners or joint applications

Who’s this for? If you need funding in a pinch for a home renovation that’s more of an emergency than it is for vanity, Discover Personal Loans is a solid contender since borrowers can receive their funds as early as the next business day. Of course, in order to get your funds in a timely manner, you must submit an application that is complete and doesn’t contain errors (you’ll also want to make sure the loan is funded on a weekday).

While there are no origination fees, Discover does charge a late fee of $39 if you fail to repay your loan on time each month.

FAQs

How do home improvement personal loans work?

A home improvement personal loan is simply a personal loan that a borrower uses for some type of home renovation project or emergency fix. Personal loans in general are a form of installment credit that can be a more affordable way to finance the big expenses in your life. In addition to home improvements, you can use a personal loan for wedding expenses, debt consolidation, funeral expenses, travel and more.

Because personal loans are a form of installment credit, borrowers repay the balance in fixed, equal amounts over a set period of time. This period of time is known as the loan’s term. Most loan terms range anywhere from six months to seven years. The longer the term, the lower your monthly payments will be, but this also usually means you’ll pay more in interest charges over the duration of your loan. It’s usually best to choose the shortest term that you can afford.

Once you’re approved for your home improvement personal loan, the cash is usually delivered directly to your checking account. When paying back the loan, be aware of any late fees or early payoff penalties. Your monthly payment will include interest. When your personal loan is paid off, the credit line is closed and you no longer have access to it.

How big of a home improvement loan can I get?

Lenders offer the ability to choose from a wide range of loan amounts, starting from $600 and going up to $100,000. However, before you apply, you should consider how much of a loan you can reasonably afford. Avoid taking on a loan that you cannot afford to pay back since you’ll also be responsible for interest charges and any additional fees should you make a late payment or miss a payment.

How is my home improvement loan rate decided?

Your interest rate is typically based on your credit score, credit history and income, as well as factors like how much of a loan you’re applying for and the loan term. Generally, loans with longer terms have higher interest rates since lenders are giving you a longer runway to pay the balance back in full.

Select now has a widget where you can put in your personal information and get matched with personal loan offers without damaging your credit score.

What are some common personal loan definitions I should know?

Here are some common personal loan terms you need to know before applying.

Bottom line

A home renovation can be a tremendous financial undertaking, which is why choosing the personal loan that’s right for you can make you feel a little less financially strained. Features like term length, funding timeline and fees are all points to take note of when weighing lenders.

Catch up on Select’s in-depth coverage of personal finance, tech and tools, wellness and more, and follow us on Facebook, Instagram and Twitter to stay up to date.

Our methodology

To determine which personal loans are the best for home improvements, Select analyzed dozens of U.S. personal loans offered by both online and brick-and-mortar banks, including large credit unions, that come with no origination or signup fees, fixed-rate APRs and flexible loan amounts and terms to suit an array of financing needs.

When narrowing down and ranking the best personal loans, we focused on the following features:

  • No origination or signup fee: None of the lenders on our best-of list charge borrowers an upfront fee for processing your loan.
  • Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan’s term, which means your monthly payment won’t vary, making your budget easier to plan.
  • Flexible minimum and maximum loan amounts/terms: Each lender provides a variety of financing options that you can customize based on your monthly budget and how long you need to pay back your loan.
  • No early payoff penalties: The lenders on our list do not charge borrowers for paying off loans early.
  • Streamlined application process: We considered whether lenders offered same-day approval decisions and a fast online application process. 
  • Customer support: Every loan on our list provides customer service available via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
  • Fund disbursement: The loans on our list deliver funds promptly through either electronic wire transfer to your checking account or in the form of a paper check. Some lenders (which we noted) offer the ability to pay your creditors directly.
  • Autopay discounts: We noted the lenders that reward you for enrolling in autopay by lowering your APR by 0.25{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 0.5{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}.
  • Creditor payment limits and loan sizes: The above lenders provide loans in an array of sizes, from $500 to $100,000. Each lender advertises its respective payment limits and loan sizes, and completing a preapproval process can give you an idea of what your interest rate and monthly payment would be for such an amount.

After reviewing the above features, we sorted our recommendations by best for overall financing needs, debt consolidation and refinancing, small loans and next-day funding.

Note that the rates and fee structures advertised for personal loans are subject to fluctuate in accordance with the Fed rate. However, once you accept your loan agreement, a fixed-rate APR will guarantee interest rate and monthly payment will remain consistent throughout the entire term of the loan. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness. To take out a loan, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more. 

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

How buy now/pay later loans are renovating the home improvement market | PaymentsSource

How buy now/pay later loans are renovating the home improvement market | PaymentsSource

by Home Improvement

Important renovations that value thousands of bucks ordinarily usually are not impulse buys. But the residence-enhancement industry even now welcomes the speed and relieve that manufactured acquire now/spend afterwards financial loans common.

The U.S. residence improvement industry will reach $600 billion by 2025, in accordance to Statista. Greater charges come with even bigger dangers, which in convert insert friction to the approach of implementing for financing. But as BNPL lending gradually revolutionizes client funding, the chance for BNPL experts to reduce into traditional private-label credit history card household-improvement financing — including by means of huge-box retailers like Home Depot and Lowe’s — is massive, according to observers.

Though the credit history card business hasn’t registered a hit from BNPL mortgage progress, U.S. client info reveals that option financing automobiles have momentum, said Jason Barro, a spouse at Bain & Co. and founder of NPS Prism, a a few-yr-old benchmarking system that utilizes wide purchaser datasets to rating how providers conduct in various marketplaces.

Considering that the start out of the pandemic, the share of U.S. people who mentioned they failed to have a most well-liked prime-of-wallet card was 9.2{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}. In excess of the future 3 yrs, as BNPL lending surged in reputation, the share of consumers not loyal to any credit history card rose steadily, reaching 15.3{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} by June 2022.

home improvement/construction

Capitalizing on that pattern, HomeAdvisor, a division of Angi Inc., past 12 months partnered with Affirm to lengthen the BNPL design to house-improvement initiatives ranging from minimal house upkeep to big remodels. Its tactic involves buyers to fill out a short software — for a longer time than a usual on the internet BNPL loan — with dwell consumer support offered to help buyers navigate techniques from locating a experienced to obtaining an estimate and finalizing a financial loan.

Wisetack, a San Francisco-based startup, is an additional player in the BNPL dwelling-improvement lending arena that aims to build scale by forming deep partnerships with platforms serving business-unique verticals. Its target is on significant-ticket purchases that go as large as $10,000 and up.

“If I very own a plumbing business enterprise, I require to have a path where individuals can come across me and get the equal of an prompt, practically seamless BNPL loan,” mentioned Bobby Tzekin, Wisetack’s co-founder and CEO.

Usually, a dwelling-improvement companies provider routes clients to a third-occasion lender to seek out financing. By distinction, Wisetack integrates its BNPL loans provides and approvals instantly into any support provider’s platform.

Wisetack has worked with Housecall Pro, Quik and Cell Tech RX to prolong BNPL financial loans to unbiased electricians, plumbers and heating and air-conditioning vendors. Its approach assures conclusion users stay on the first system wherever they join with a expert, concur on an estimate and decide on financing.

In August, Wisetack grew to become the funding arm for Thumbtack, a home-solutions web page enabling consumers to look for for, rate and retain the services of area suppliers to function on everything from house-enhancement jobs to lawful expert services and party setting up.

Tzekin, who has many years of knowledge doing work in client payments — like seven a long time at PayPal in merchant solutions and stints at YapStone and Lending Club, exactly where he was vice president of products — stated Wisetack’s purpose was to hold the financial loan approval and management carefully tied to the project to improved regulate possibility.

“We’ve created a method to streamline the stream of having an estimate and approving a bank loan that even consists of ways to quickly make alterations in the scope of function during the job,” Tzekin reported.

Hatch Financial institution, primarily based in San Marcos, California, is Wisetack’s lover to underwrite and secure loans it sells receivables from loans to third-get together credit rating buyers, Tzekin reported. Wisetack is effective with platform associates to charge merchants a payment for closing discounts the rate may differ centered on the scope and possibility of the project.

“We evaluate chance for each individual challenge in serious time, with info that tells us who debtors are and what they are borrowing for, so we can selling price every single financial loan properly,” Tzekin mentioned.

Wisetack lifted $45 million in Sequence B funding in 2021, bringing its full to $64 million given that the firm’s start in 2018.

12 best home improvement loans for aging in place

12 best home improvement loans for aging in place

by Home Improvement

Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.

You can use home improvement loans to cover expenses for any home renovation project without putting your equity at risk.  (Shutterstock)

Staying in your own home as you age is called “aging in place,” and it’s a goal for many Americans. Nearly 90{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of Americans over age 65 want to stay in their homes as long as possible, according to a survey from the National Conference of State Legislatures and the AARP Public Policy Institute.

Fortunately, if aging in place is your goal, you don’t have to risk your valuable home equity — or your home — to make safety and accessibility improvements. You can use a personal loan for home improvements.

Credible makes it easy to see your prequalified personal loan rates from various lenders, all in one place.

What is ‘aging in place?’

Aging in place means making a conscious decision to stay in your home as long as possible as you age rather than relocating or moving into an independent living community or assisted living facility.

People who choose to age in place often need to make changes to their homes to make aging in place more comfortable — or even possible. These improvements might include installing grab bars or a walk-in shower in the bathroom, widening doorways to accommodate a wheelchair or walker, or replacing exterior stairs with ramps.

But paying for these home upgrades in addition to other retirement costs can be a challenge.

What is a home improvement loan?

A home improvement loan is an unsecured personal loan that you take out to fund home improvements. You’ll repay the loan in monthly installments at a fixed interest rate for a certain period of time.

Unlike a home equity loan or home equity line of credit, a home improvement loan doesn’t require you to put your home up as collateral, so it won’t deplete your equity. And if you run into financial troubles and can’t afford the payments, you aren’t at risk of losing your home.

Visit Credible to compare personal loan rates from various lenders, without affecting your credit.

Best home improvement loans for aging in place

If you plan to age in place, the following 10 Credible partner lenders can help you finance necessary home renovations with a home improvement loan:

Best lenders for large loan amounts

LightStream

  • Loan amounts: $5,000 to $100,000
  • Terms: 2 to 7 years (12 years for home improvement loans)
  • Minimum credit score: 660
  • Fees: No prepayment, origination, or late payment fees

SoFi

  • Loan amounts: $5,000 to $100,000
  • Terms: 2 to 7 years
  • Minimum credit score: Does not disclose
  • Fees: No prepayment or origination fees

Best lenders for small loan amounts

LendingPoint

  • Loan amounts: $2,000 to $36,500
  • Terms: 2 to 6 years
  • Minimum credit score: 580
  • Fees: Origination fees from 0{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 7{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}; no prepayment penalty

OneMain Financial

  • Loan amounts: $1,500 to $20,000
  • Terms: 2 to 5 years
  • Minimum credit score: None
  • Fees: Origination fees vary by state; no prepayment penalty

Best lenders for good credit

Axos Bank

  • Loan amounts: $10,000 to $50,000
  • Terms: 3 to 6 years
  • Minimum credit score: 700
  • Fees: Origination fee of 0{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 2{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}; $15 late fee; $25 insufficient funds fee; no prepayment penalty

Discover

  • Loan amounts: $2,500 to $35,000
  • Terms: 3 to 7 years
  • Minimum credit score: 660
  • Fees: Late fee of $39; no origination fee

Marcus by Goldman Sachs

  • Loan amounts: $3,500 to $40,000
  • Terms: 3 to 6 years
  • Minimum credit score: 660
  • Fees: No application fees, late fees, or prepayment fees

Best lenders for poor credit

Avant

  • Loan amounts: $2,000 to $35,000
  • Terms: 2 to 5 years
  • Minimum credit score: 550
  • Fees: Administration fee of up to 4.75{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}; no prepayment penalty

Upgrade

  • Loan amounts: $1,000 to $50,000
  • Terms: 2 to 6 years
  • Minimum credit score: 560
  • Fees: Origination fee of 2.9{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 8{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}; no prepayment penalty

Upstart

  • Loan amounts: $1,000 to $50,000
  • Terms: 3 to 5 years
  • Minimum credit score: 580
  • Fees: Origination fee of 0{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 10{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}; late fee of 5{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of the past-due balance or $15 (whichever is greater); $15 ACH return or check refund fee; no prepayment penalty

Other lenders to consider

The following two lenders aren’t Credible partners, so you won’t be able to easily compare your rates with them on the Credible platform. But they may also be worth considering if you’re looking for a home improvement loan.

Navy Federal Credit Union

  • Loan amounts: $250 to $50,000
  • Terms: 3 to 15 years
  • Minimum credit score: Does not disclose
  • Fees: Late payment and returned payment fee; no origination fee or prepayment penalty

PNC Bank

  • Loan amounts: $1,000 to $35,000
  • Terms: 6 to 60 months
  • Minimum credit score: Does not disclose
  • Fees: No prepayment penalty

Methodology

Credible evaluated the best home improvement loans based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, and fees. Credible’s team of experts gathered information from each lender’s website, customer service department, and via email support. Each data point was verified to make sure it was up to date.

Home improvement loan vs. home equity financing

A home improvement personal loan is an unsecured loan. This makes it different from home equity loans or home equity lines of credit, which use the homeowners’ real estate as collateral.

A home equity loan, also known as a second mortgage, allows you to borrow against your home equity in a lump sum. A home equity line of credit (HELOC) also allows you to borrow against your home equity, but you receive the cash in a revolving line of credit — similar to a credit card — instead of a lump sum.

Another option is a reverse mortgage, also known as a home equity conversion mortgage. Reverse mortgages are complicated, and if you become ill and have to leave the home for 12 months or more, the lender can call the loan due, requiring you to sell the home in order to pay back the loan and avoid foreclosure.

Home improvement loans offer a few advantages over home equity loans and HELOCs, including:

  • Don’t deplete your equity — Since unsecured personal loans aren’t backed by your home’s equity, home improvement loans don’t deplete the equity you’ve built up or put your home at risk.
  • Usually faster to secure — Many lenders can approve a home improvement loan in a matter of days, versus two to six weeks for a home equity loan or line of credit. This makes them a good option for home improvement projects with more urgent timelines.
  • Predictable payments — Most personal loans are fixed-rate loans, so you repay them in predictable monthly payments. HELOCs, on the other hand, are usually variable-rate loans. If interest rates rise, your monthly payment goes up, which could make your payments unaffordable.

If you’re ready to apply for a home improvement loan, Credible lets you quickly and easily compare personal loan rates to find one that suits your needs.

The Best Investment Property Loans of 2022

The Best Investment Property Loans of 2022

by Investment Property

The Best Investment Property Loans

Photo: istockphoto.com

Real estate investing for beginners can involve a real learning curve, the least of which is determining the best way to pay for investment properties. Even experienced real estate investors could benefit from knowing all their options when it comes to financing an investment property. Although there are many options, not every financial option is the right choice for every investor, so it’s important to learn all the ins and outs of every investment property loan. Becoming well versed in these financial tools will play a major role in helping investors get the best return on that investment in years to come.

  1. BEST OVERALL: PennyMac
  2. RUNNER-UP: Lima One Capital
  3. BEST APPLICATION PROCESS: Kiavi
  4. BEST CLOSING PROCESS: LendingOne
  5. BEST FOR VA LOANS: Veterans United
  6. ALSO CONSIDER: CoreVest Finance

The Best Investment Property Loans Options

Photo: istockphoto.com

What to Consider When Choosing One of the Best Investment Property Loan Providers

When shopping for one of the best investment property loans, it’s important to know terms and factors to look for in order to get the right financing. These include having a healthy credit score, a large down payment, and knowing what the application process looks like. Being prepared could save time and increase the odds of approval.

Coverage Area

When investing in real estate, borrowers will want to keep in mind that the lender who will finance that investment needs to cover the area where the property is located. If the property is in the same area where the investor lives, going with a local banker could be the right choice when buying rental property. However, if the property is located elsewhere—in another state or city, perhaps—it’s possible financing will need to come from a lender in the same state or geographic area as the property. The first question buyers will want to ask potential lenders will likely be: Will you provide financing for an investment property located in [this area]? Knowing this could prevent wasting time if the lender won’t provide financing where the property is located.

Loan Amount

A key consideration is knowing the maximum loan limitations for the various types of investment loans. This provides insight on which loans could provide the financing needed to purchase a rental property. For many investment loans, the maximum loan amount is generally $647,200, but there are products that could provide higher loan amounts for properties in areas where real estate is more expensive. When speaking with investment loan lenders, the second question buyers will want to ask is what the lender’s loan limits are. If the lender can’t or won’t provide the amount necessary to buy the property, the buyer can cross it off the list and move on to the next one.

Interest Rate

As is the case with all property loans, investment property mortgage rates are based on a number of factors. Generally speaking, the rates for an investment property loan typically are slightly higher than those for a primary residence mortgage. This is because lenders typically consider investment property loans a higher-risk product than a traditional mortgage on the borrower’s primary residence. In addition, the borrower’s credit score almost always affects the loan’s interest rate. The general rule of thumb is the higher the credit score, the lower the interest rate. The amount the borrower pays as a down payment also could affect the interest rate. A higher down payment could result in a lower interest rate.

Minimum Credit Score

As with other loans, lenders will review the borrower’s credit score in an effort to determine the borrower’s creditworthiness. The higher the credit score, the higher the odds for loan approval. That being said, lenders do work with borrowers that have less-than-stellar credit scores. Some lenders accept a minimum credit score as low as 620, but many lenders will only lend to borrowers whose credit score is 640 or higher. Taking steps to boost their credit score could result not only in loan approval for borrowers, but also lower interest rates and more favorable loan terms. Therefore, it’s important for borrowers to review their credit score before applying for any loans to determine what effect it could have on an investment loan application.

Down Payment

In the same way a traditional home mortgage works, lenders will require a down payment for an investment property loan. The exact amount depends on the lender and the type of loan, but many lenders often want a down payment that’s equal to 20 percent of the property’s value. If the borrower chooses a loan backed by the Federal Housing Administration (FHA) or the U.S. Department of Veterans Affairs (VA) to purchase a multifamily unit in which the borrower also lives, the down payment could be just 3.5 percent. Borrowers who pay higher down payments increase the likelihood of receiving loan approval as well as lower interest rates. Keep in mind, though, that borrowers cannot use money given to them as a gift from family members or friends for the down payment with investment loans other than FHA or VA loans.

Loan Options

There are several types of loans to purchase a home for borrowers wanting to invest in real estate. A conventional loan is a standard loan with no requirements to live in the property. FHA and VA loans can be used to purchase a multifamily property with up to four units, provided the borrower lives in one of the units. Borrowers who do not qualify for conventional, FHA, or VA loans can apply for a non-qualified mortgage, which uses the estimated rental income for qualification. Owner financing is another option, provided the seller is willing to act as the lender.

Borrowers with a lot of equity in their primary residence could also leverage that home equity to obtain a home equity loan, a home equity line of credit (HELOC), or a cash-out refinance to purchase an investment property. The risk here, though, is borrowers could lose their primary residence if they cannot repay these loans.

If the borrower plans to flip the investment property, a fix-and-flip loan—also called a hard- money loan—could be an option.

Application Process

Applying for any loan typically takes some time, but applying for an investment property loan requires some extra steps because the borrower has to provide additional information on the property. Borrowers will want to look for a lender that streamlines this process so it’s efficient and easy to complete. Today, many lenders offer an application process both online and by phone, so borrowers can choose the process they prefer. Having the necessary paperwork at hand also can speed up the process. This includes not only W-2s and bank statements but also leasing or rental income statements on the property, plus any documentation of the borrower’s financial assets, such as a stock portfolio or retirement account statements.

Closing Time Frame

Waiting to close on an investment property loan can feel like an eternity, but many lenders generally have a closing time frame of 30 days. Some lenders could have a shorter or longer closing interval, so buyers will want to ask lenders for their estimated time frames to get an idea of when the loan proceeds will be available. This is important in the event the seller wants to sell in a hurry, or there is a lot of competition for the property. No borrower wants to miss out on a great investment property because the lender took too long to close the loan.

Our Top Picks

The best investment property loans come from lenders who serve a wide coverage area, work with borrowers who may have less-than-perfect credit, and have an easy application process.

The Best Investment Property Loans Option: PennyMac

Photo: pennymac.com

Why It Made the Cut: PennyMac offers a large coverage area, varied rate-lock options, a fast and convenient online quote tool, and various online tools such as mortgage calculators, affordability calculators, and home valuation tools.

PennyMac has a lot going for it, starting with a large coverage area that includes Washington, D.C., and all states except New York. Also, borrowers who apply for and receive preapproval can qualify for a discount on their principal loan amount. The discount is 0.5 percent of the principal amount up to $5,000, which could help borrowers save money on their investment loan. In addition, customers can lock in their rate for 60, 75, or 90 days, giving them ample time to find an investment property after being preapproved for a loan. Longer rate-lock periods could protect borrowers from rising interest rates, which would mean paying less interest over the life of the loan.

PennyMac has fairly high eligibility standards borrowers must meet to qualify for a loan, including a good to great credit score (680 or above) and 6 months of cash reserves in their accounts, and only offers one loan type: a conventional loan. However, for customers who meet these qualifications and need this loan type, PennyMac may have the best rates and terms available.

The company’s website offers various online tools for borrowers to use, including mortgage calculators, affordability calculators, and home valuation tools, plus a convenient online quote tool, making it easier for borrowers to understand and apply for loans. The quote process doesn’t include a credit pull, which means the quote won’t appear on the applicant’s credit report and affect their credit score. The results break down different loan options comparing interest rates, monthly payments, and APR so borrowers can see how much they’ll pay for financing.

Specs

  • Coverage area: 49 states and Washington, D.C.
  • Minimum credit score: 680
  • Loan options: Conventional fixed rate
  • Application process: Online, phone
  • Closing time frame: 21 days or more

Pros

  • $5,000 potential discount on preapproved loans
  • Lengthy 60- to 90-day rate-lock period options
  • Convenient online quote tool
  • User-friendly loan calculators and property valuation tools

Cons

  • Relatively high loan-eligibility standards
  • Somewhat limited financing options available

The Best Investment Property Loans Option: Lima One Capital

Photo: limaone.com

Why It Made the Cut: Lima One Capital features numerous financing options, a convenient loan-management dashboard, and real estate market analysis, plus a large coverage area and straightforward application process.

Lima One offers multiple ways for customers to finance their investment property purchase, including rental, fix-and-flip, new construction, and multifamily property loans. With more options available, borrowers may be better able to find the right loan to finance their real estate investment.

Furthermore, Lima One’s online dashboard is easy to use and lets borrowers check the status of loan applications, apply for new loans, make payments on existing loans, and submit requests for services such as loan extensions. This one-stop shop makes it convenient for borrowers to stay on top of their loans, especially if they plan to branch out and purchase multiple investment properties using the same lender.

Although interest rates with Lima One for first-time borrowers are on the higher end (starting out at 12 percent), experienced borrowers may find much lower rates for investment property loans. Additionally, borrowers can use Lima One’s market analysis to make more-informed decisions about their real estate investments and decide whether it makes financial sense to buy property in certain areas.

Specs

  • Coverage area: 46 states and Washington, D.C.
  • Minimum credit score: 660
  • Loan options: Rental, fix and flip, new construction, multifamily
  • Application process: Online, phone
  • Closing time frame: 30 days on average

Pros

  • Many financing options available
  • Straightforward loan management via online dashboard
  • Insightful real estate market analysis available

Cons

  • Somewhat high interest rates for first-time investors

The Best Investment Property Loans Option: Kiavi

Photo: kiavi.com

Why It Made the Cut: Kiavi offers flexible eligibility requirements, including the ability to get a loan without an appraisal or proof of income, and does not have a firm debt-to-income (DTI) ratio requirement.

Thanks to Kiavi’s flexible eligibility requirements, borrowers just learning how to invest in real estate with no money may get the loan they need. The lender does not require borrowers to submit proof of income, such as W-2 forms or tax returns, to qualify for a loan. This can help borrowers with irregular income streams get the financing they need to invest in real estate.

And while many lenders have DTI requirements that borrowers need to meet in order to qualify for a loan, Kiavi does not have a minimum DTI requirement. This allows more people to qualify for an investment property loan who otherwise might have trouble securing financing. However, Kiavi’s relatively limited coverage area means that some borrowers won’t be able to get a loan in their area and will need to look to another lender that does.

Appraisals are not required on fix-and-flip loans, so investors can get financing without going through the time and expense of a home appraisal. They also don’t need to worry about their loan falling through because of complications with a home appraisal, which might be the case with a lender that requires an appraisal.

Specs

  • Coverage area: 32 states and Washington, D.C.
  • Minimum credit score: 640
  • Loan options: Rental, fix and flip
  • Application process: Online, phone
  • Closing time frame: 10 business days or more

Pros

  • Appraisal not required for fix-and-flip loans
  • Income documentation not required
  • No minimum debt-to-income ratio

Cons

  • Small service area covering only 32 states and Washington, D.C.

The Best Investment Property Loans Option: LendingOne

Photo: lendingone.com

Why It Made the Cut: Specializing in real estate investment property loans, LendingOne features a fast 10- to 14-day closing time frame plus a wide variety of financing options for borrowers.

Because LendingOne’s business is focused specifically on investment property loans, the company’s loan officers and support staff have the specialized knowledge to answer any questions a borrower might have or address any concerns. LendingOne offers multiple types of investment property loans to choose from, including new construction and fix-to-rent loans. Regardless of the type of rental property a borrower is trying to finance, it’s likely that LendingOne has a loan option that will suit the situation. In addition, the company offers a relatively short closing time frame of just 10 to 14 days, which means that borrowers can secure their financing without delay, complete their purchase, and start earning rental income from their new property as soon as possible.

LendingOne works solely with investors who have purchased at least one investment property in the past, so first-time investors will need to look elsewhere for their loan needs. While the minimum credit score requirement of 680 is on the high end, this may not be a factor for many experienced investors looking to finance their next property.

Specs

  • Coverage area: 46 states and Washington, D.C.
  • Minimum credit score: 680
  • Loan options: Rental, fix and flip, new construction, multifamily, fix to rent
  • Application process: Online, phone
  • Closing time frame: 10 to 14 days

Pros

  • Specialty in real estate investment loans
  • Many financing options available
  • Quick 10- to 14-day closing time frame

Cons

  • Previous investment experience required
  • Relatively high 680 minimum credit score requirement

The Best Investment Property Loans Option: Veterans United

Photo: veteransunited.com

Why It Made the Cut: Veterans United specializes in VA loans, so it can work with eligible service members who want to use a VA loan to buy investment property in which they plan to live.

With a nationwide coverage area, Veterans United works solely with eligible service members looking to invest in owner-occupied properties. As such, borrowers would not be able to go this route if they wanted to, for instance, buy a vacation rental property. In fact, borrowers would be very limited in the type of investment property they could purchase with this lender.

Because Veterans United specializes in VA loans, the company is better equipped to navigate eligibility requirements and help borrowers get the right financing for their purchase. And with the company’s relatively low credit-score requirements, more people could potentially qualify for a loan, assuming they meet other VA loan-eligibility standards.

Specs

  • Coverage area: 50 states and Washington, D.C.
  • Minimum credit score: 620
  • Loan options: VA loans
  • Application process: Online, phone
  • Closing time frame: 30 to 45 days

Pros

  • Specialty in VA loans
  • Large service area covering 50 states and Washington, D.C.
  • Relatively low 620 minimum credit score requirement

Cons

  • Eligibility restricted to service members
  • Loan availability limited to owner-occupied properties

The Best Investment Property Loans Option: CoreVest Finance

Photo: corevestfinance.com

Why It Made the Cut: CoreVest Finance features a large coverage area, specialty in real estate investment loans, and numerous financing options for borrowers who have fairly significant previous experience with real estate investments.

CoreVest Finance specializes in real estate investment loans, so it understands the type of financing needed to purchase investment properties and the nuances that come with this type of real estate transaction. Borrowers can feel more confident that there won’t be any unexpected obstacles when securing financing because the lender primarily processes loans for real estate investments. It’s important to note that borrowers must have completed at least three real estate investment transactions over the previous 2 years to be eligible for a loan, which can be a barrier for newer investors.

For those who do qualify, CoreVest Finance has several investment property loan options to choose from, including rental, fix-and-flip, new construction, and multifamily property loans. As such, borrowers are more likely to find the right type of financing needed to purchase the specific kind of investment property they want.

Specs

  • Coverage area: 48 states and Washington, D.C.
  • Minimum credit score: 660
  • Loan options: Rental, fix and flip, new construction, multifamily
  • Application process: Online, phone
  • Closing time frame: 3 to 6 weeks

Pros

  • Specialty in real estate investment loans
  • Many financing options available

Cons

  • Significant previous investment experience required

Our Verdict

We chose PennyMac as Best Overall because it offers fast and convenient tools for borrowers, plus it serves borrowers in all states but New York. Lima One Capital was selected as Runner-Up thanks to its numerous financing options as well as a convenient loan management dashboard.

How We Chose the Best Investment Property Loan Providers

When considering the best investment property loans, we looked at lenders’ coverage areas to check service availability as well as eligibility requirements such as minimum credit scores and previous investment experience. We also considered the different loan options and types of financing available and who they might appeal to most. Another consideration was the type of investment property the lender would finance. Customer experience–related factors were also accounted for, such as the availability of online tools and resources, closing time frames, and application processes. Although this is not an exhaustive list of qualifying factors, we felt it provided a good basis for determining the best investment property loan providers.

Before You Choose One of the Best Investment Property Loan Providers

The research provided here is a starting point for borrowers interested in investing in real estate and searching for financing for potential investment properties. However, the lenders listed here may not be a good fit for every investor, so it’s important for borrowers to do independent research to find the right lender for their investment. It’s possible a local bank or credit union also could provide good options for financing an investment property, so borrowers may want to check with local lenders to see whether they offer any loan options for their investment. Investing in real estate involves a certain level of risk, so borrowers will want to be well informed before applying for any loan or making any property purchase.

Cost of Taking Out a Loan With One of the Best Investment Property Loan Providers

As with all types of loans, the cost of taking out an investment property loan with any lender, including those listed in this guide, will vary on a number of factors. Two of the key factors include the borrower’s credit score and amount of money used as a down payment. A lower credit score or down payment could result in higher interest rates, which would increase the total cost of the loan. The fees lenders charge for investment property loans also vary, so it’s imperative for borrowers to ask for a complete list of all associated fees with the loan in order to compare them from lender to lender. Finally, buyers will want to keep in mind additional expenses that come along with investment properties, such as obtaining a policy from one of the best rental property insurance companies, fees to list the property on one (or more) of the best rental listing sites, and the costs of hiring one of the best property management companies to help the investor with the day-to-day oversight of the rental property.

The Advantages of Choosing One of the Best Investment Property Loan Providers

Investing in real estate could provide much-needed income, retirement savings, and extra funds for such expenses as college tuition, buying another car, or paying for a vacation. By working with one of the best investment property loan providers, borrowers could find peace of mind knowing they are working with lenders who are experienced and knowledgeable in investment property loans.

  • Many of the best investment property loan providers serve a large coverage area.
  • Many of the best investment property loan providers offer a variety of loan types.
  • The best investment property loan providers often work with borrowers who may not have a stellar credit score.

FAQs

Investing in real estate is not something to jump into lightly. Potential investors will want to be knowledgeable about the process as well as what’s required to qualify for an investment property loan before ever applying for any loan. These are some of the top questions investors ask when considering an investment property loan.

Q. What is an investment property loan?

An investment property loan is a loan used to purchase a property that is not the borrower’s primary residence, or a multifamily unit in which the borrower resides in one unit and rents out the others for profit.

Q. What are the most common investment property loans?

Some of the most common investment property loans include conventional loans, FHA and VA loans, and non-qualified mortgage loans.

Q. What is the minimum down payment for investment property loans?

Many lenders require a minimum down payment of 20 percent. For FHA and VA loans, the minimum down payment is typically 3.5 percent. Borrowers will want to check with their chosen lender to determine the exact down payment requirements for the loan they want.

Q. Is it hard to get a mortgage for an investment property?

For borrowers with a good credit score, adequate down payment, and a portfolio of financial assets, it may not be hard to get a mortgage for an investment property.

Q. How much can I borrow for an investment property?

For many investment loans, the maximum loan amount is generally $647,200, but there are products that could provide higher loan amounts for properties in areas where real estate is more expensive.

Q. What is a good rate of return on rental property?

That depends on the property, where it is located, and other factors. Borrowers will want to weigh all these factors before purchasing a property to determine the chances they will be able to make a profit from renting it out, bearing in mind there will be additional costs to consider, such as purchasing a policy from one of the best short-term rental insurance companies for investors with vacation rental properties.

7 Best Home Improvement Loans of 2022

7 Best Home Improvement Loans of 2022

by Home Improvement

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

Best Home Improvement Loan Reviews

  • Long loan terms, up to 12 years

  • 0.50{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} rate discount with AutoPay

  • Same-day funding available

  • No origination or prepayment fees
  • Doesn’t offer pre-qualifications

  • High minimum loan amount

HIGHLIGHTS

Loan amount
$5,000 – $100,000
Annual percentage rate (APR)
4.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} – 20.49{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
Loan term lengths
Up to 12 years
Minimum credit score
Not specified
Funding time
Same-day

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{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 16.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} with AutoPay, though in some states the maximum rate can go all the way up to 20.49{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}.

LightStream offers a 0.50{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} 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{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} 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.

  • Maximum loan amount of $100,000

  • Offers unemployment protection

  • Accepts co-borrowers

  • 0.25{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} rate discount with AutoPay

  • No origination fees, late fees or repayment penalties
  • High minimum loan amount

  • No physical branches

HIGHLIGHTS

Loan amount
$5,000 – $100,000
Annual percentage rate (APR)
7.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} – 23.43{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} (with AutoPay discount)
Loan term lengths
2 – 7 years
Minimum credit score
Not specified
Funding time
Same-day

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{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 23.43{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} with a 0.25{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} 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.

  • Flexible repayment term of up to 7 years

  • No origination fees or repayment penalty

  • No interest if you return loan funds within 30 days
  • Loan maximum of $35,000 is lower than many competitors

  • No AutoPay rate discount

  • Can’t add a co-signer

  • Late fee of $39

HIGHLIGHTS

Loan amount
$2,500 – $35,000
Annual percentage rate (APR)
5.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} – 24.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
Loan term lengths
3 – 7 years
Minimum credit score
Not specified
Funding time
Next business day

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 $35,000 and choose fixed monthly payments between 36 to 84 months. Interest rates range from 5.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 24.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}. Although Discover’s APRs are somewhat 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{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} 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.

  • No origination fees, late fees, prepayment fees or sign-up fees

  • Offers on-time payment reward

  • Option to change payment due date
  • No joint application available

  • Limited loan amount

HIGHLIGHTS

Loan amount
$3,500 – $40,000
Annual percentage rate (APR)
6.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} – 19.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
Loan term lengths
3 – 6 years
Minimum credit score
Not specified
Funding time
3 – 5 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{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 24.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}

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.

Do note, however, that 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.

  • Loan amounts from $600

  • No origination fees or prepayment penalty

  • Accepts co-borrowers
  • Must become a credit union member

  • Late fee of $29

HIGHLIGHTS

Loan amount
$600 – $50,000
Annual percentage rate (APR)
7.74{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} – 17.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
Loan term lengths
3 – 5 years
Minimum credit score
650
Funding time
1 – 2 business days

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{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 17.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} 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.

  • No origination fees or prepayment penalties

  • 0.50{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} rate discount with AutoPay

  • Easy online application

  • Co-applicant accepted
  • Funding may take up to four business days for non-U.S. Bank account holders

  • Shorter repayment periods for U.S. Bank non customers

HIGHLIGHTS

Loan amount
$1,000 – $25,000 ($50,000 for U.S. Bank existing customers)
Annual percentage rate (APR)
7.49{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} – 19.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
Loan term lengths
1 – 7 years
Minimum credit score
660+
Funding time
1 – 4 days

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 7.49{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 19.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} based on your creditworthiness.

You can easily check your estimated rate in 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.

To apply, a credit score of 620 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.

  • No origination fee

  • No prepayment penalty

  • Same-day funding available

  • Co-applicant accepted
  • Must be a military member or their family members

  • High loan minimum, $25,000

  • No prequalification

HIGHLIGHTS

Loan amount
From $25,000
Annual percentage rate (APR)
7.49{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} – 18.00{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
Loan term lengths
Up to 7 years
Minimum credit score
Not specified
Funding time
Same day

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 features fixed rates ranging from 7.49{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 18.00{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}. However, the minimum interest rate varies depending on loan terms. Loans with terms of up to 36 months have a starting interest rate of 7.49{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, Those with terms of 37 to 60 months and 61 to 180 months start at 14.79{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} and 15.29{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, 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. 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.

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer

Get one step closer to your dream home

A Home Improvement Loan can be a convenient way to finance your renovation. Click below to learn more.

Get Started

Other companies we considered

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

Wells Fargo

  • Rates as low as 5.74{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}

  • No origination fee or prepayment penalty

  • Up to 0.50{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} rate discount with AutoPay and a qualifying Wells Fargo checking account
  • Only existing Wells Fargo customers can apply for a loan online

  • Customers who don’t have a Wells Fargo account must apply at a branch

  • No locations in MI, IN, OH, OK, LA, MO, KY, ME, NH, VT, MA, WV, HI

Wells Fargo is a well-known lender that offers rates starting at 5.74{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} 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

  • Offers loan amounts from $2,000 up to $50,000

  • Loan terms from three to five years

  • No prepayment penalty
  • Charges an origination fee of 0.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 8.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, deducted from your loan

  • Interest rate up to 35.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}

  • Higher loan minimums for residents in Massachusetts, Ohio, New Mexico and Georgia

Best Egg’s loans are capped at $50,000 with repayment terms from three to five years. Its maximum APR of 35.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} is higher than what the top lenders in our list offer. In addition, it charges an origination fee of up to 8.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}.

TD Bank

  • Competitive APRs starting at 6.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} up to 19.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}

  • No origination fees or prepayment penalties

  • Next business day funding available, if approved by 4:30pm ET Monday through Friday
  • Only serves 16 states: CT, NJ, DE, NY, WA, NC, FL, PA, ME, RI, MD, SC, MA, VT, NH, VA

TD Bank offers loan amounts from $2,000 to $50,000 with rates starting at 6.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 19.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}. 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

  • Loans from $1,000 up to $40,000

  • Lets you add a co-signer

  • Fast approval times and quick funding, typically within 24 hours
  • Origination fee from 2{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 6{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of the loan amount

  • Maximum APR is 36.00{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}

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{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 6{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} and a maximum APR of 36{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}.

OneMain Financial

  • Same-day funding available

  • Offers co-signed loans

  • No prepayment fees
  • Low maximum loan amount of $20,000

  • APR starts at 18.00{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}

  • Origination fee of up to 10{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}

  • Might require a collateral

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 and APRs starting at 18{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, which is considerably higher than most lenders. In addition, OneMain Financial charges an origination fee of up to 10{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} and in some instances, might require collateral such as your vehicle.

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{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 36{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}, whereas home equity loans interest rates range from 4{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 13{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}.

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{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 10{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} 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{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} 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{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}.
  • 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{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} of equity available, meaning you can borrow up to 80{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} 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{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} 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{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} 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 4.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} up to 35.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}. 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{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} up to 13{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}) 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{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} 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.

Latest News

  • With an ultra-competitive house market and limited inventory, most homebuyers are wondering when will be a good time to buy. However, some experts agree that relief is on its way. Read When Will Home Prices Fall? to find out the experts’ predictions.
  • According to an analysis from a real estate brokerage, cash offers are more likely to win a bidding than financed offers. Here’s why home sellers prefer cash offers.

Best Home Improvement Loans FAQ

How to finance a home renovation

There are multiple ways to finance home renovations, although the best option will depend on your financial situation. Some options include applying for a home improvement loan, a cash-out refinance, using a credit card or tapping into your home equity through a home equity loan or a home equity line of credit.

How to get a loan for home improvement

Before you start shopping, determine how much your home project will cost and the amount you need to borrow. You should then compare what each lender offers, including estimated loan costs, interest rates, repayment terms and credit score requirements. Lastly, check which documents are needed to submit your application; these can include your ID, Social Security number, utility bills to confirm your physical address, proof of employment, W-2s, pay stubs and other financial information.

Are home improvement loans tax deductible?

Interest from unsecured home improvement loans or personal loans used for home renovations can’t be deducted from your taxes. However, if the loan is secured by your home (as with home equity loans and home equity lines of credit) and used to make substantial home improvements, you can deduct interest on loans of up to $375,000 if you’re an individual filer or up to $750,000 if you’re a joint filer.

What is the current interest rate for home improvement loans?

As of August 2022, current interest rates for home improvement loans range from 4.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9} to 35.99{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}. Do note that rates vary depending on the bank, loan amount and your credit history.

Are home improvement loans a good idea?

As with most financial decisions, it depends on whether you can undertake a debt and afford its repayment. It also depends on the type of home project you have in mind. For instance, home improvement loans are typically used to fund large projects like a bathroom remodel, roof replacement or for installing energy-efficient systems.

Since home improvement loans are a type of unsecured personal loan, they don’t require using your home as collateral as is the case with home equity loans, home equity lines of credit and home refinancing. Home improvement loans are also typically funded within a few days and have lower loan costs, although its interest rates can be higher, going all the way to 36{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}.

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

Homeowners in these states take out the highest rate of home improvement loans

Homeowners in these states take out the highest rate of home improvement loans

by Home Improvement


Canva

Homeowners in these states take out the highest rate of home improvement loans

Two men working to remodel a home’s walls

The number of home improvement projects grew in the United States during COVID-19, as people stayed at home more often and needed additional space, according to Harvard’s Joint Center for Housing Studies. In fact, Americans spent $367 billion on home improvement projects in 2021.

Building out a new home office, replacing the roof, upgrading plumbing, or creating a backyard oasis can take substantial funds, so many Americans turn to home improvement loans to help them finance their projects.

A home improvement loan is money secured from a lender to be used for repairing, remodeling, or improving personal property. It’s different from a home equity loan in that it isn’t based on how much value a homeowner has built up in their house. Home improvement loans aren’t tied to the equity of a house, so interest rates are generally higher than on a home equity loan, and homeowners usually pay them off in five years or less.

This gives newer homeowners—and those who haven’t paid off much of their mortgage—the opportunity to borrow money to tackle remodeling projects. Home improvement loans also tend to be approved more quickly, so homeowners with a big emergency repair can leverage this type of loan to get the job done.

Home improvement loans have been a vital financial tool during this boom in home renovation. More than 1 million home improvement loans were taken out across the country in 2021, totaling $131 billion in borrowing.

Portland Real Estate analyzed loan origination data from the Consumer Financial Protection Bureau to see which states had homeowners who took out the highest rate of home improvement loans in 2021, the latest information available. The share was determined by dividing the number of owner-occupied houses in each state by the number of home improvement loans originated. The average loan amount was calculated by dividing the total dollar amount of home improvement loans taken out in each state by the number of loans taken out.


Canva

#15. New Jersey

A neighborhood in New Jersey

– Number of loans: 32,745
– Portion of houses with loans: 1.0{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
– Total amount loaned: $4.44 billion
– Average loan amount: $135,664


Canva

#14. Vermont

A neighborhood in Vermont

– Number of loans: 2,687
– Portion of houses with loans: 1.02{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
– Total amount loaned: $286.9 million
– Average loan amount: $106,764


Denise Kappa // Shutterstock

#13. Ohio

A house in a suburban neighborhood of Cleveland, Ohio

– Number of loans: 48,502
– Portion of houses with loans: 1.03{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
– Total amount loaned: $4.0 billion
– Average loan amount: $82,464


Canva

#12. Florida

Neighborhoods in Florida

– Number of loans: 82,289
– Portion of houses with loans: 1.04{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
– Total amount loaned: $10.02 billion
– Average loan amount: $121,751


Canva

#11. Pennsylvania

A neighborhood in Pennsylvania

– Number of loans: 60,798
– Portion of houses with loans: 1.19{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
– Total amount loaned: $5.52 billion
– Average loan amount: $90,860


Felix Mizioznikov // Shutterstock

#10. Delaware

A residential upscale homes in Brookside, Delaware, as seen from an aerial view

– Number of loans: 4,528
– Portion of houses with loans: 1.22{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
– Total amount loaned: $434.8 million
– Average loan amount: $96,020


Canva

#9. Arizona

A suburban housing development in Scottsdale, Arizona

– Number of loans: 33,798
– Portion of houses with loans: 1.28{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
– Total amount loaned: $4.39 billion
– Average loan amount: $129,895


d murk photographs // Shutterstock

#8. Massachusetts

A residential neighborhood in Massachusetts

– Number of loans: 33,986
– Portion of houses with loans: 1.28{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
– Total amount loaned: $5.32 billion
– Average loan amount: $156,645


Canva

#7. Oregon

A home in Portland, Oregon

– Number of loans: 21,394
– Portion of houses with loans: 1.30{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
– Total amount loaned: $2.74 billion
– Average loan amount: $128,013


Canva

#6. Washington

An aerial view of neighborhood in Seattle, Washington

– Number of loans: 39,108
– Portion of houses with loans: 1.35{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
– Total amount loaned: $5.45 billion
– Average loan amount: $139,358


Canva

#5. New Hampshire

A neighborhood in Portsmouth, New Hampshire

– Number of loans: 7,419
– Portion of houses with loans: 1.38{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
– Total amount loaned: $856.1 million
– Average loan amount: $115,387


Canva

#4. Colorado

Residential neighborhood in Colorado during autumn

– Number of loans: 31,069
– Portion of houses with loans: 1.45{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
– Total amount loaned: $4.16 billion
– Average loan amount: $133,884


Jon Bilous // Shutterstock

#3. Rhode Island

A home in Providence, Rhode Island

– Number of loans: 6,518
– Portion of houses with loans: 1.57{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
– Total amount loaned: $707.7 million
– Average loan amount: $108,582


Charles Knowles // Shutterstock

#2. Idaho

An Idaho subdivision as viewed from above

– Number of loans: 14,160
– Portion of houses with loans: 2.18{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
– Total amount loaned: $1.88 billion
– Average loan amount: $132,540


Jason Finn // Shutterstock

#1. Utah

Homes in Highland, Utah, in a premium neighborhood with mountain and sky views

– Number of loans: 25,227
– Portion of houses with loans: 2.51{d4d1dfc03659490934346f23c59135b993ced5bc8cc26281e129c43fe68630c9}
– Total amount loaned: $2.97 billion
– Average loan amount: $117,877

This story originally appeared on Portland Real Estate and was produced and
distributed in partnership with Stacker Studio.