Best Home Improvement Loans of 2024
Updated March 22, 2024 at 2:36 pm
Whether you’re upgrading your kitchen cabinets or building an ADU (affordable dwelling unit) in your backyard, home improvement loans can help finance your projects. However, with so many home remodeling loans to choose from, deciding on the best one for you can feel daunting. We’ve done some of the legwork for you by rounding up the top loan options for your next home improvement project.
Our Methodology Newsweek Vault’s loan experts evaluated multiple data points to help our readers make sense of their borrowing options across student loans and personal loans. To narrow down the best available offers, we weigh the product pros and cons across five core categories, including:
- Application process
- Eligibility requirements
- Interest rates
- Loan amounts (minimum and maximum)
- Repayment flexibility
Our Picks - Best for Zero Fees: SoFi Home Improvement Loan
- Best for Large Projects: LightStream Personal Loan
- Best for Low Starting Rates: Upstart Home Improvement Loan
- Best for Flexible Repayment Terms: Discover Home Remodel Loan
- Best for Small Projects: Navy Federal Credit Union Home Improvement Loan
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5 Best Home Improvement Loans
Best for Zero Fees
SoFi Home Improvement Loan
on Credible’s website
Why We Chose It
SoFi home improvement loans don’t impose costly origination fees or even common charges like late fees and prepayment penalties.
Pros
- No fees
- Interest rate discounts
- High maximum loan amount ($100,000)
Cons
- Higher interest rates, starting at 8.99% APR (with autopay and direct deposit discounts)
- High minimum loan amount
- No co-signers
Best for Large Projects
LightStream Home Improvement Loan
on Credible’s website
Why We Chose It
The cost of a home improvement or renovation project can be steep. LightStream’s maximum $100,000 loan amount gives borrowers the flexibility to get enough money to accommodate unexpected costs.
Pros
- High loan limits for big projects
- 0.50% autopay discount available
- Rate Beat Program offers 0.10% discount from competing offers
Cons
- No loan preapprovals
- Payment due date can’t be changed after funding
- Requires good to excellent credit
Best for Low Starting Rates
Upstart Home Improvement Loan
on Credible’s website
Why We Chose It
Qualified borrowers who have strong credit and meet Upstart’s underwriting criteria might be eligible for Upstart’s lowest interest rate. This starting rate is notably lower than that of competitors, meaning the cost of borrowing for an upcoming home project should be less overall.
Pros
- Competitive interest rate, starting at 6.40% APR
- Fast funding of loan
- Low minimum loan amount ($1,000)
Cons
- Origination fee (up to 12%) might apply
- Only two term options—three or five years
- High maximum interest rate (35.99%)
Best for Flexible Repayment Terms
Discover Home Improvement Loan
on Credible’s website
Why We Chose It
Discover home improvement loans offer a range of repayment options, from three to seven years.
Pros
- Extended repayment period available (up to seven years)
- No collateral required
- No fees if payments arrive on time
Cons
- Co-borrowers and co-signers not allowed
- Limited maximum loan amount
- No interest rate discounts
Best for Small Projects
Navy Federal Credit Union Personal Expense Loan
Vault Verified
Why We Chose It
Not all home improvement or repair projects require a lot of money. For smaller projects of just a few hundred dollars, Navy Federal Credit Union members can access a small-balance personal loan without the risk of overborrowing.
Pros
- Minimum $250 loan amount
- Repayment periods up to five years
- Funding as soon as 24 hours
Cons
- Credit union membership required
- Various fees
- 0.25% rate discount only for active-duty and retired military members
What Is a Home Improvement Loan?
A home improvement loan is an installment loan that can be used to pay for a home repair, renovation or remodeling project. It’s typically an unsecured loan, meaning no collateral is required to get the loan.
Home improvement loans usually come with a fixed interest rate, meaning you should always know how much you’ll owe each month. A lender might charge an origination fee that amounts to a certain percentage of the amount being borrowed. Origination fees generally range from 1% to 10%.
How Do Home Improvement Loans Work?
With a home improvement loan, you’ll receive a one-time, lump-sum payout. If your lender charges an origination fee, the amount is automatically deducted from the payout.
Funds are typically deposited into a bank account that you choose. From there, you can use the money to buy materials, obtain permits, pay contractors or cover other home improvement expenses.
How To Get a Home Renovation Loan
Lenders have different requirements for home improvement loans. Generally, you’ll need to meet minimum criteria for income, debt-to-income ratio, credit and more.
- Determine your project’s needs. Think about the scope of your home improvement project. Research your projected costs and how much you’ll need to borrow.
- Compare loan offers. Look at offers from at least three lenders. This step helps you understand the rates you can qualify for, the loan amount you can get and the repayment terms that’ll be required.
- Fill out an application. After whittling your options to your preferred home improvement loan, submit a formal application. You might need to provide documentation as proof of identity, such as a government-issued ID card, and supply proof of your income, like your pay stubs and tax returns.
Pros and Cons of a Home Improvement Loan
Pros
- Fast funding: Borrowers can typically receive funds within 24 hours of signing a loan agreement. Depending on when you accept, some lenders offer same-day funding.
- Fixed monthly payment: Since it’s an installment loan with a fixed rate, you’ll have the same payment each month. This predictability makes it easier to juggle expenses.
- High borrowing limits: Unlike other financing options, such as credit cards, lenders often have high borrowing limits. Some offer as much as $100,000 to highly qualified borrowers.
Cons
- Credit requirement: You’ll need to satisfy the lender’s credit history and credit score expectations. If you don’t have strong credit, you likely won’t qualify for the lowest rate or might not be approved at all.
- Short repayment turnaround: Home improvement loans offer a forgiving repayment period of usually two to seven years. Although this is better than a one-month turnaround with a credit card, it’s much shorter than a home equity loan (up to 30 years).
- Might be secured: Many home improvement loans are unsecured and don’t require collateral. However, some lenders might offer only a secured home improvement loan or approve you only for a secured financing option.
Alternatives to Home Improvement Loans
If taking out a home improvement loan isn’t the best fit for your needs, there are a few other options, although each has its own caveats.
Home Equity Loan
A home equity loan is an installment-based financing option that’s sometimes called a “second mortgage.” Like a home improvement loan, its rates are typically fixed, and you’ll receive a lump-sum payout.
When you take out a home equity loan, your borrowing limit is generally limited to an amount that’s up to 80% of your home equity. It uses your home as collateral if you’re unable to repay the debt.
Home Equity Line of Credit
A home equity line of credit (HELOC) is another secured loan that uses your home as collateral if you default. It’s similar to a credit card in that you’re given a line of credit, based on your home equity, and you can make transactions against it as you need to.
This can be especially helpful when unexpected costs arise in the middle of a home improvement project. HELOCs also differ from a home equity loan in that the interest rate is usually variable, meaning it can go up or down during the loan period.
Credit Cards
A credit card can help you cover a time-sensitive or small home maintenance cost. This might involve fixing a plumbing leak, for example. If your project is larger, a credit card might be an expensive option.
Variable interest rates for credit cards are typically higher than fixed home renovation loan rates. Additionally, if you want to avoid interest, you’ll need to repay the full amount by your next credit card statement or else your balance will roll over to the following month.
Frequently Asked Questions
Are LightStream Home Improvement Loans Unsecured?
LightStream home improvement loans are unsecured. This means that you don’t need to provide collateral to secure the loan if you’re approved for financing.
Should You Use a Personal Loan for Home Improvement?
If you don’t have cash on hand for a home improvement project, an unsecured personal loan might be worth considering. This type of loan offers fixed rates that are typically lower than the variable rates for a credit card. Plus, many personal loans don’t require collateral.
What Is the Average Length of a Home Improvement Loan?
Home improvement loans typically come with two- to seven-year payoff periods. However, each lender offers its own terms, which might be more or less than this range.
Editorial Note: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, hotel, airline or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post. We may earn a commission from partner links on Newsweek, but commissions do not affect our editors’ opinions or evaluations.
