Home improvement loans help you finance updates and repairs that can add value and enjoyment to your home. Whether you’re considering a home improvement loan for an emergency expense or a backyard deck, you must first know how this type of loan works and then compare your options.
This home improvement loan guide covers everything from costs to loan types, qualification requirements and steps to choose the best lender for you.
To calculate each score, we use data about the lender and its loan offerings, giving greater weight to factors that matter most to borrowers. For mortgage lenders, we take into account each company’s customer service ratings, interest rates, loan product availability, minimum down payment, minimum FICO score and online features.
The weight each scoring factor receives is based on a nationwide survey on what borrowers look for in a lender.
To receive a rating, lenders must offer qualifying loans nationwide and have a good reputation within the industry. Read more about our methodology.
Best for online mortgages with cash back rewards
Borrowers with an Axos Bank checking account can reduce or eliminate the lender fee and earn cash back by using the account to make monthly mortgage payments.
Before You Apply
- Mortgage types: Conventional, ARM, FHA, VA, Home Equity Loans, HELOC, Refinancing
- Minimum FICO credit score: Not disclosed
- Minimum down payment: Not disclosed
- Better Business Bureau rating: A+
Best Features
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Earn 3% annualized cash back – 0.25% monthly – if you have an Axos Bank checking account and use it to pay your mortgage.
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Reduce or eliminate the $995 lender fee with an Axos Bank checking account.
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On-time closing is guaranteed for buyers of single-family homes.
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Access mortgage loan consultants to discuss your home financing needs.
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Best for client relations
Before You Apply
- Mortgage types: Conventional, ARM, FHA, VA, Jumbo, Construction-to-permanent, HELOC, Refinancing
- Minimum FICO credit score: Not Disclosed
- Minimum down payment: 3%
- Better Business Bureau rating: A+
Best Features
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The application process can be completed online.
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Truist Bank offers a range of mortgage products.
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Best for low APR
Before You Apply
- Mortgage types: Conventional, ARM, FHA, VA, USDA, Reverse Mortgage, HELOC, Cash-Out Refinancing, Refinancing
- Minimum FICO credit score: 620
- Minimum down payment: 3%
- Better Business Bureau rating: A+
Best Features
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Select from many mortgage types, including low- and no-down-payment loans.
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Choose between fixed- and adjustable-rate mortgages.
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Best for low down payment
Before You Apply
- Mortgage types: Conventional, ARM, FHA, VA, Refinancing, Home Equity Loans
- Minimum FICO credit score: 620
- Minimum down payment: 3%
- Better Business Bureau rating: A+
Best Features
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PNC Bank offers multiple mortgage product lines.
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Low down payment mortgages are available.
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Its website offers an online homeownership cost tool.
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Best for product availability
Before You Apply
- Mortgage types: Conventional, ARM, FHA, VA Refinancing, Home Equity Loans
- Minimum FICO credit score: Not disclosed
- Minimum down payment: 3%
- Better Business Bureau rating: NR
Best Features
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Borrowers can choose from a variety of mortgage products.
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Wells fargo offers specialized loans with additional loan options.
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Borrowers can get prequalified and apply online.
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Best for low costs
Before You Apply
- Mortgage types offered: Conventional, FHA, VA, ARM, Jumbo, Cash-Out Refinancing, Refinancing
- Minimum FICO credit score: Not disclosed
- Minimum down payment: 5%
- Better Business Bureau rating: B+
Best Features
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Down payments as low as 3% are accepted.
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Fixed- and adjustable-rate mortgages are available.
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Best for online application and approval
Before You Apply
- Mortgage types: Conventional, ARM, FHA, VA, Refinancing, Home Equity Loans
- Minimum FICO credit score: Not disclosed
- Minimum down payment: 3%
- Better Business Bureau rating: A+
Best Features
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Easy online quote request.
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Comprehensive app with mobile-specific features.
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Loans tailored to physicians with high student loan debt are available.
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Best for online service
Before You Apply
- Mortgage types: Conventional, Refinancing, Home Equity Loans
- Minimum FICO score: 620
- Minimum down payment: 5%
- Better Business Bureau rating: A+
Best Features
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Down payments as low as 5%.
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Prequalify and apply for your mortgage online.
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Refinancing to consolidate your student loans and mortgage.
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Best for a lender credit and no lender fees
Before You Apply
- Mortgage types: Conventional, ARM, VA, Refinancing, HELOC
- Minimum FICO credit score: 620
- Minimum down payment: 0% for a VA loan
- Better Business Bureau rating: A+
Best Features
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Receive a lender credit of up to $2,500 upon closing.
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Choose from a variety of loan types.
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Best for large loan amounts
Before You Apply
- Mortgage types: Conventional, FHA, VA, ARM, HELOC, Refinancing
- Minimum FICO credit score: 620
- Minimum down payment: 5%
- Better Business Bureau rating: A+
Best Features
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Bank of America has a wide variety of mortgage products.
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The lender offers annual percentage rate or closing cost discounts for qualifying Bank of America and Merrill Lynch clients.
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Home equity lines of credit have no annual, application or cash advance fees or closing costs.
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Lender |
Learn More |
APR |
Max. Loan Amount |
Min. Credit Score |
|---|---|---|---|---|
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2.49% to 19.99% | $100,000 | 670 | |
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4.99% to 17.99% | $50,000 | 650 | |
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Not disclosed | $50,000 | 300 (or insufficient history) | |
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5.99% to 24.99% | $40,000 | 550 | |
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5.97% to 29.99% | $45,000 | Not disclosed | |
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9.95% to 35.99% | $35,000 | Not disclosed | |
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6.99% to 19.99% | $40,000 | 670 | |
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4.74% to 20.28% | $100,000 | Not disclosed | |
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5.99% to 35.99% | $50,000 | 640 | |
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7.04% to 35.89% | $40,000 | Not disclosed |
Best for low interest
Before You Apply
- Minimum FICO credit score: 670
- Loan amounts: $5,000 to $100,000
- Repayment terms: up to 144 months
- Better Business Bureau rating: A+
Best Features
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Borrowers can use loans for a range of purposes, from buying a car to financing a horse.
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Loans are available from $5,000 to $100,000.
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LightStream doesn’t charge origination, prepayment or late fees.
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Best for low minimum loan amounts
Before You Apply
- Minimum FICO credit score: 650
- Loan amounts: $600 to $50,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: A+
Best Features
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Terms extend up to 60 months.
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There are no origination fees.
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Borrowers get funds in one or two days upon approval.
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Best for borrowers with no credit or poor credit
Before You Apply
- Minimum FICO credit score: 300 (or insufficient history)
- Loan amounts: $1,000 to $50,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: A-
Best Features
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Upstart says 99% of applicants who accept their loans by 5 p.m. Eastern Time Monday through Friday will get their money in one business day.
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Upstart offers loans to borrowers with no credit scores, which traditional lenders may not do.
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You can repay all or part of your loan anytime without being charged a fee.
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Best for debt consolidation
Before You Apply
- Minimum FICO credit score: 550
- Loan amounts: $5,000 to $40,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: A+
Best Features
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Borrowers are not charged late or returned payment fees.
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Applicants can get preapproved with no hard credit check.
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Poor-credit borrowers may be eligible.
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Best for digital customer care
Before You Apply
- Minimum FICO credit score: undisclosed
- Loan amounts: $2,000 to $45,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: A+
Best Features
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Same-day loan funding is available for up to $25,000.
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No prepayment penalties apply.
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An online application process is available.
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Best for fair credit
Before You Apply
- Minimum FICO credit score: undisclosed
- Loan amounts: $2,000 to $35,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: A
Best Features
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Borrowers with fair credit scores can qualify.
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Funds for unsecured personal loans can be generally deposited the next business day after approval.
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Secured and unsecured loans are available.
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Best for no origination fee
Before You Apply
- Minimum FICO credit score: 670
- Loan amounts: $3,500 to $40,000
- Repayment terms: up to 72 months
- Better Business Bureau rating: A+
Best Features
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Borrowers pay no fees for personal loans.
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Payment due dates are adjustable.
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Best for loans of up to $100,000 with no fees
Before You Apply
- Minimum FICO credit score: undisclosed
- Loan amounts: $5,000 to $100,000
- Repayment terms: up to 84 months
- Better Business Bureau rating: A+
Best Features
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SoFi doesn’t charge late fees.
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You can borrow up to $100,000.
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Co-borrowers are accepted.
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Best for fast funding
Before You Apply
- Minimum FICO credit score: 640
- Loan amounts: $2,000 to $50,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: A+
Best Features
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Loan funding typically takes one to three business days.
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The minimum loan amount is $2,000 in most states.
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Borrowers incur no prepayment penalty.
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Best for fair credit
Before You Apply
- Minimum FICO credit score: undisclosed
- Loan amounts: $1,000 to $40,000
- Repayment terms: up to 60 months
- Better Business Bureau rating: A-
Best Features
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Loans of $1,000 or more are available.
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Joint applications are accepted.
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Borrowers can qualify with fair to excellent credit.
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A home improvement loan is financing you use to pay for home repairs and enhancements. When you get a home improvement loan, you use the loan funds to pay your contractor or buy supplies to complete the work, then pay the loan off over time. A home improvement loan is helpful if you don’t have cash to pay upfront for home improvement expenses.
Home equity loans and personal loans are the most common types of home improvement loans, but there are other options, such as cash-out refinancing. Banks, credit unions and online lenders may offer home improvement loans.
The type of loan you choose will depend in large part on the scale of your home improvement project. Here are four types of home improvement loans and an overview of each one:
A home equity loan is a second mortgage from a bank, credit union or other lender enabling you to borrow against the equity in your home. Lenders usually limit you to borrowing 80% to 85% of your home’s value. You will repay the balance with equal monthly payments over a fixed term, in addition to your original mortgage. Learn more about the best home equity loans.
- Pro: A single lump-sum loan amount gives you the ability to tackle major projects, plus interest rates are low.
- Con: Qualification is more involved and includes a home appraisal.
- Best for: people with a clear home improvement plan and budget.
A cash-out refinance replaces your mortgage with a new home loan for more money than you owe on the original mortgage, giving you the difference in cash. You’ll access your equity to get cash at closing, which you can use to make home improvements. Lenders may allow you to draw out up to 80% of your home’s value. Your refinanced home loan will have a new balance, payment, interest rate and repayment terms. Most cash-out refinances have fixed interest rates. Learn more about the best mortgage refinance lenders.
- Pro: You can lower your interest rate while tapping your home’s equity.
- Con: With your home as collateral, you risk losing it if you fail to make payments.
- Best for: people who have built a lot of equity and plan to stay in their home for a while.
Home Equity Line of Credit
A HELOC is like a credit card because it allows you to draw funds as needed up to a limit and then repay them at a variable interest rate. HELOCs are typically limited to 85% of the equity of your home. Learn more about how to compare home equity loans and HELOCs.
- Pro: Only borrow exactly what you need.
- Con: With variable interest rates, loans could be more costly than expected.
- Best for: people who aren’t sure what the final construction bill will be.
Using a personal loan for home improvement is like getting any unsecured loan. It’s not secured by your home, and your home improvement loan rate depends on your creditworthiness. Personal loans are usually available with fixed interest rates and in amounts from $1,000 to $100,000. Because a personal loan is unsecured, it will have a higher interest rate than a loan secured by your home. Learn more about the best personal loans.
- Pro: You can qualify even if you don’t have significant equity in your home.
- Con: Interest rates are higher than for collateral loans.
- Best for: people who don’t need a lot of cash.
- Finance updates and repairs that add value to your home.
- Avoid draining cash reserves.
- Pay off improvements over time.
- Choose from a number of loan options to fit the scale of your project.
- You increase your debt.
- You may need to put down collateral, which you could risk losing if you can’t repay the loan.
- You could pay a high APR for a personal loan, depending on your credit.
- Consider your eligibility. Home improvement lenders typically have minimum credit score requirements to be approved for a home improvement loan. Generally, you’ll need at least a 620 FICO credit score to be approved for a home improvement loan. Review your credit report to check for errors, and work on paying down debt before you apply for a home improvement loan.
- Determine how much you need to borrow. Consider your home improvement project amount and leave room for error. Don’t take out a property improvement loan that strains your finances just to make cosmetic improvements.
- Determine your preferred loan term. Consider your budget and how quickly you can pay off the loan. A long-term home equity loan could make sense if you’re financing a room addition or new roof. But a 30-year loan isn’t a good choice for minor repairs that you may need to repeat before you’re done paying for them.
- Prequalify. Lenders use a soft credit pull to check your odds of qualifying and to estimate loan rates and terms. You can prequalify with multiple lenders, but first verify that the lender is only performing a soft credit check to avoid credit damage.
- Make your selection. Run the numbers for the loan options you are considering, weighing convenience against cost. Choose a loan and finalize details such as the loan amount. With personal loans, you can get funds as fast as the next business day after you accept the loan terms. With other home improvement loans, the timeline is much longer: A cash-out refinance can take up to 45 days.
Focus on these four key areas when choosing a home improvement lender:
- Eligibility requirements: Find out the lender’s minimum qualifications and prequalify to check your odds of approval.
- Loan amounts: All home equity loans have maximum loan-to-value amounts.
- APR: Compare home improvement rates by getting prequalified rate quotes. Be sure you’re comparing apples to apples when you consider loan APRs and fees.
- Customer service: Read lender reviews, and search the Better Business Bureau and Consumer Financial Protection Bureau Consumer Complaint Database to learn about the customer service you can expect from a home improvement lender.
Interest on personal loans isn’t tax deductible, but it is for home equity loans in certain situations. The funds must be used to “buy, build or substantially improve” the taxpayer’s home that secures the loan, according to the IRS.
However, the federal government caps the interest deduction at $750,000 on qualified residential loans. The limit is $375,000 for a married taxpayer filing a separate return.
Yes, borrowers can find a number of alternatives beyond personal loans and home equity loans, such as the:
- 203(k) loan: Backed by the Federal Housing Administration, a 203(k) loan finances the home and the cost of repairs and upgrades in one loan.
- Title I loan: This Department of Housing and Urban Development-backed loan finances property improvements and renovations and is capped at $25,000.
- Home construction loan: A home construction loan covers the cost of building a home or a major renovation and is paid to the contractor.
- Renovation loan: Some lenders give loans based on the future value of your home, after you make the improvements. These loans are best for homeowners who haven’t built much equity yet.
A home improvement loan may be difficult to get with bad credit. Most lenders require a credit score of at least 620, and a FICO score below 580 is considered poor.
The federally backed 203(k) loan may be one option for a bad credit home improvement loan. Borrowers need a minimum credit score of 500 with a 10% down payment or a score of at least 580 with a 3.5% down payment.
Best for short-term loans
Before You Apply:
- Mortgage types: Conventional, ARM, FHA, VA, Refinancing, Home Equity Loans
- Minimum FICO credit score: 740
- Minimum down payment: 5%
- Better Business Bureau rating: A+
Best Features
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Provides mortgage loans nationwide.
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Allows you to apply online without first speaking with a loan officer.
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Assists U.S. Bank customers with closing costs.
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