|
You might be using an unsupported or outdated browser. To get the best possible experience please use the latest version of Chrome, Firefox, Safari, or Microsoft Edge to view this website. |
SCROLL TO SITE
Throughout the pandemic, the home improvement market saw a surge in activity. Chances are you’re one of many looking for a way to finance your improvement projects.
Look no further: You can use home improvement loans to help fund your home renovations. These loans are typically unsecured personal loans, which means the bank or lender doesn’t require collateral—something of value like your house—to secure the loan. You’ll pay interest on the full loan amount and usually have one to seven years to repay it.
Forbes Advisor reviewed a wide variety of home improvement loans to bring you the best of the bunch, representing features that appeal to a wide spectrum of borrowers.
680
4.74% to 19.38%
with autopay
$5,000 to $100,000
SoFi is an online lending platform that offers unsecured fixed-rate personal loans in every state except Mississippi. Founded in 2011, SoFi has extended more than $50 billion in loans and stands out for offering high loan amounts and extended loan terms.
Loans are available between $5,000 and $100,000, making SoFi a great option for those with excellent credit who need to borrow a large amount of money for a home improvement project. Loan amounts available may vary by the state you live in. Repayment terms range from two to seven years, making SoFi an incredibly flexible option for those with sufficient credit (minimum 680) and annual income (at least $45,000). SoFi also lets prospective borrowers submit joint applications—although co-signers are not permitted.
Approved borrowers are rewarded with comparatively low APRs. What’s more, SoFi doesn’t charge origination fees, late fees or prepayment penalties—a standout feature because personal loan lenders often charge origination or late payment fees at a minimum.
Eligibility: Personal loan applicants should have a minimum credit score of 680. However, many successful applicants have a score of 700 or higher. Applicants also must have an annual income of at least $45,000, though the average income of a SoFi borrower is over $100,000.
Loan uses: In general, SoFi personal loans are limited to use for personal, family and household purposes. This means a borrower can use loan funds to cover things like home improvements, medical costs, credit card consolidation and relocation costs. However, SoFi loans cannot be used to fund a new business venture, the purchase of real estate, investments and securities, postsecondary education or short-term bridge financing.
Turnaround time: Borrowers typically receive funds within a few days—or as soon as the next business day after approval and acceptance of terms. However, funding times may be longer than a few days, especially for loans over $20,000.
660
3.99% to 16.49% with autopay
$5,000 to $100,000
LightStream is a consumer lending division of Truist, which formed following the merger of SunTrust Bank and BB&T. The platform offers unsecured personal home improvement loans from $5,000 to $100,000. Although a number of lenders offer smaller loans than the LightStream minimum, few lenders offer a higher maximum loan.
Repayment terms are available from two to seven years, making it an excellent option for those who want to spread out the payment of large home improvement costs over time.
LightStream charges no origination, late payment or prepayment fees. The lender also offers a 0.50% rate discount for borrowers who enroll in autopay—higher than most lenders with the same perk—as well as a 30-day loan experience guarantee to ensure borrower satisfaction, Covid-19/hardship assistance and a rate-beat program. LightStream will beat a competitor’s interest rate by 0.1% for applicants who meet certain criteria.
LightStream offers loans in all 50 states plus Washington, D.C. and Puerto Rico, and applicants can contact the lender’s customer support team seven days a week; current borrowers have access to customer support Monday through Saturday. And, while LightStream doesn’t offer a mobile app for loan management, customers can access their account through LightStream.com.
Eligibility: LightStream recommends applicants have good to excellent credit before applying for a personal loan. To increase their chances of approval, applicants also should have several years of credit history, including multiple account types, as well as an income that is stable enough to service current debts and a new LightStream loan.
LightStream doesn’t give prospective borrowers the ability to prequalify for a loan. This fact—combined with the minimum credit score requirement—makes the platform a better fit for those with a strong credit profile. Applicants with excellent credit also are more likely to get favorable terms. LightStream does not allow co-signers, but prospective borrowers can submit a joint application.
Loan uses: LightStream’s personal loans can be used for a wide range of purposes, from paying for home improvements to purchasing a new car, RV or jewelry. However, LightStream really stands out because loans can be used to finance land, timeshares and so-called tiny homes.
As with other top lenders, LightStream prohibits use of its personal loans for postsecondary education costs, business purposes and illegal activities. Borrowers also are prohibited from using LightStream loan funds to refinance an existing LightStream loan.
Turnaround time: LightStream borrowers can receive funds as soon as the same day if the loan is approved before 2:30 p.m. ET on a banking business day. To receive same-day funding, the applicant also must review and electronically sign the loan agreement; provide LightStream with funding preferences and relevant banking information; and complete the final verification process—all before 2:30 p.m. on the day the loan is approved.
Marcus does not disclose this information
5.94% to 35.97%
$3,500 to $40,000
Marcus by Goldman Sachs is a subsidiary of the investment bank Goldman Sachs and offers home improvement loans between $3,500 and $40,000. While Marcus may not be the ideal choice for those who need access to a large loan amount, the platform still offers rather flexible loans that are available for three- to six-year terms.
Borrowers can access APRs as low as about 6% with a 0.25% discount for autopay enrollees. And, like some other top lenders, Marcus doesn’t charge any fees, including for sign-up, late payment and prepayment. Plus, borrowers can benefit from the platform’s on-time payment reward and flexible payment dates.
As with many other top lenders, Marcus lets applicants prequalify with a soft credit pull, so it’s easy to see your loan options without hurting your credit. While Marcus customers don’t have access to a mobile app for managing their loans, the lender makes up for the lost convenience with robust customer support options. Borrowers can contact customer support seven days a week from 9 a.m. to 7 p.m. ET and have access to extensive online resources.
Eligibility: Marcus does not disclose the minimum required credit score, but applicants should have a minimum score of 660. Those with higher scores are eligible for lower rates and more favorable terms. And, while Marcus doesn’t disclose an income requirement, the platform does require applicants to have an income sufficient to cover loan repayment. In contrast to some personal loan providers, Marcus does not permit co-signers or co-applicants.
Loan uses: Marcus’ personal loans can be used for home improvement, debt consolidation, moving and relocation, special events, travel and vacations and more. Borrowers cannot use Marcus personal loans to refinance existing student loans, but the platform supports other forms of debt consolidation with a consolidation calculator and direct payment to third-party lenders.
Turnaround time: An applicant’s loan may be approved in under 24 hours—quicker than some lenders, but not the fastest approval process we encountered. Once a loan is approved, funds take between one and four days after bank account verification to land in the borrower’s account. However, funding time varies depending on the financial institution and when the loan was processed.
No requirement
5.74% to 19.99%
with autopay
$3,000 to $100,000
No requirement
5.74% to 19.99%
with autopay
$3,000 to $100,000
Wells Fargo offers fixed-rate personal loans with limits between $3,000 and $100,000 and repayment terms from 12 to 84 months. While longer term lengths, such as 84 months, will decrease your fixed monthly payment, you will pay more interest over the life of your loan compared to a loan with terms of, let’s say, 12 months.
Wells Fargo home improvement loans boast interest rates between 5.74% and 24.24% for customers who qualify for the 0.25% relationship discount. To qualify, you need to have a Wells Fargo checking account and make automatic payments from a Wells Fargo deposit account. If you don’t enroll in autopay, interest rates range from 5.99% to 24.49%.
Although Wells Fargo is available to anyone in the United States, only current Wells Fargo customers will be able to apply online. New customers will need to visit a branch location. Wells Fargo does not have branch locations in Indiana, Kentucky, Louisiana, Ohio, Oklahoma, Maine, Massachusetts, Michigan, Missouri, New Hampshire, Vermont or West Virginia.
Eligibility: Wells Fargo home improvement loans are available for both existing and new Wells Fargo customers. Existing customers can apply online, while new customers must visit a branch location. Although Wells Fargo doesn’t have a minimum credit score requirement, it’s a good rule of thumb to maintain a score of at least 670 to increase your chances of receiving a low personal loan rate.
Loan uses: You can use Wells Fargo personal loans for any type of purchase besides a home and education expenses. For example, you can finance purchases like new appliances or furniture, fund renovations, consolidate your debt, and cover expenses, such as medical bills and auto repairs.
Turnaround time: Wells Fargo offers a simple and quick application process for existing customers. If you submit an application online, you’ll receive an instant approval response. Once approved, you can typically receive your funds by the next business day.
No requirement
7.49% to 18% with autopay
$25,000 minimum loan amount
No requirement
7.49% to 18% with autopay
$25,000 minimum loan amount
Navy Federal Credit Union’s home improvement loan offers some attractive benefits for credit union members who need quick cash for a home improvement project. One great money-saving feature is that the lender doesn’t charge an origination fee.
Additionally, there are no minimum credit score requirements. According to the credit union: “Navy Federal uses a holistic approach to determine members’ creditworthiness as other variables, along with credit score, help inform the financing decision.”
Navy Federal home improvement loans require a $25,000 minimum loan amount for loans with terms of 61 to 84 months and a $30,000 minimum loan amount for terms of 85 to 180 months.
Eligibility: You must be a member of Navy Federal to apply. To become a member, you or one of your family or household members must have ties to the armed forces, Department of Defense, Space Force or National Guard. Members can apply online. Navy Federal does not have a minimum credit score requirement; however, borrowers with higher credit scores have a better chance of qualifying and receiving favorable terms. We recommend a minimum score of 670.
Loan uses: You can use Navy Federal home improvement loans for projects and repairs, remodeling or efficiency upgrades. If you want a general personal loan for unplanned and planned expenses, including auto repairs, vacations and other major purchases Navy Federal has loans designed specifically for those expenses.
Turnaround time: Navy Federal offers a simple online application process and different fund disbursement methods. The quickest way to receive your funds is through an automatic deposit, which you can receive immediately after approval.
580
5.94% to 35.97%
$1,000 to $50,000
Upgrade provides accessible online and mobile credit and banking services in every state except Iowa, Vermont and West Virginia. Although maximum APRs are on the high end compared to other online lenders, Upgrade makes home improvement loans available to those with poor credit history.
Loans amounts, which start at just $1,000, are flexible but cap out at $50,000—lower than lenders that focus on lower-risk borrowers. Three- and five-year loan terms are available.
Upgrade charges an origination fee between 2.9% and 8% of the loan, and borrowers will encounter a $10 fee if their payment is more than 15 days late or if the payment does not go through; there are no discounts for autopay. That said, Upgrade borrowers are not subject to a prepayment penalty, so you can reduce the overall cost of the loan if you’re able to pay it off early.
Beyond offering accessible personal loans, Upgrade streamlines the lending process with a mobile app that lets borrowers view their balance, make payments and update personal information. Upgrade’s Credit Heath tool also makes it easy to track your credit score over the life of your loan.
Eligibility: Prospective borrowers should have a minimum score of 580 to qualify for an Upgrade personal loan, making it an accessible option for those with fair credit. Furthermore, the lender does not require applicants to meet a minimum income requirement. Applicants should have a maximum pre-loan debt-to-income (DTI) ratio of 45%, excluding their mortgage.
The lender also considers each applicant’s free cash flow, which demonstrates their likely ability to make consistent on-time loan payments. Ideally, applicants should have a minimum monthly cash flow of $800.
Upgrade increases loan accessibility by also allowing co-applicants.
Loan uses: As with most other personal loans, loans from Upgrade must be used to make home improvements, pay off credit cards, consolidate other debt or pay for other large purchases. However, Upgrade stands out from some lenders by allowing borrowers to use personal loan funds to cover business expenses. What’s more, Upgrade will directly pay off third-party lenders, making debt consolidation more convenient.
There are no specific prohibitions on the use of Upgrade loans other than those already imposed by law.
Turnaround time: Once an Upgrade loan is approved, it generally takes up to four business days for a borrower to receive the funds. However, if Upgrade is directly paying off a borrower’s loans to a third-party lender, it can take up to two weeks for the funds to clear.
Consider these tips when comparing home improvement loans:
We reviewed 18 popular lenders based on 14 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the six best lenders based on the weighting assigned to each category:
Within each category, we also considered several characteristics, including loan amounts, repayment terms, APR ranges and applicable fees. We also looked at minimum credit score requirements, whether each lender accepts co-signers or joint applications and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like prequalification and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
A home improvement loan is typically an unsecured personal loan that you can use to finance home improvements, remodeling, repairs or upgrades. Borrowers will receive the funds as a lump-sum amount and repay the balance over the course of one to seven years, depending on their specific terms. Homeowners with equity in their homes can also finance home improvement projects through home equity loans and home equity lines of credit (HELOCs).
When you get a personal home improvement loan, you’ll receive a lump-sum payment from your lender. Repayment starts as soon as the funds are disbursed, and you’ll make fixed monthly payments. You’ll pay interest on the full loan amount, which varies depending on your lender and creditworthiness. Some lenders also charge origination fees that typically range from 1% to 8% of the loan amount, although some loans are fee-free.
You can use your funds to finance your improvement expenses, such as redoing your kitchen or upgrading the electrical in your house. Unlike a credit card, which has a limit you can reuse as you repay your balance, you cannot reuse your loan funds. Once you use your funds, and if you need additional financing, you would need to apply for a second home improvement loan. Be cautious opening a second loan, though, because another hard inquiry can damage your credit.
Related: How Do Personal Loans Work?
While the process varies by lender, follow these general steps to apply for a personal loan:
Related: 5 Personal Loan Requirements To Know Before Applying
Personal loans are not your only source of home improvement financing. Depending on your current situation, there are other options available that can get you the money you need.
Homeowners with equity in their homes—the home’s current market value minus the remaining mortgage balance—may be able to get a home equity loan or home equity line of credit (HELOC). Both let you draw against your home, which means your home secures the transaction and the lender can repossess it if you fail to repay.
Home equity loans are disbursed as lump-sum amounts while HELOCs limit you to withdraw funds on an as-needed basis. Either way, you can use these funds to help finance your home improvement projects.
Related: HELOC Vs. Home Equity Loan: Which Is Right For You?
A cash-out refinance replaces your existing mortgage with a new, larger mortgage. You withdraw the difference between the two mortgages and use the money however you want, including for home improvements. However, you’ll need at least 10% to 20% equity left after the refinance. This percentage varies depending on your lender and whether you’re willing to pay for private mortgage insurance (PMI) on the new loan.
Related: Pandemic Remodeling Boom Looming? Cash-Out Refinancing Hits 13-Year High
Alongside loans and lines of credit, you may also be able to use credit cards. However, these are typically suited for smaller home improvement projects, not your $20,000 bathroom remodel. Nonetheless, credit cards can be an excellent way to access a credit limit that you can reuse as you repay your balance. And you’ll only pay interest on unpaid balances at the end of your billing cycle.
However, if you have a credit score of at least 670, you may qualify for a 0% APR credit card. These cards typically offer 0% interest for an extended period of time, usually for six months to 21 months. During the introductory period, your balance won’t accrue interest; however, unpaid balances at the end of the introductory period will. This means if you repay your balance before the 0% APR period ends, your home improvement project could be interest free.
The cost of renovating or improving a house typically depends on where you live and the room you are working on. For example, kitchen and bathrooms typically cost the most while bedrooms, living rooms and basements are the more affordable of the bunch. Here’s a look at common home improvement projects and their average costs, according to HomeAdvisor.
Project | Average cost range | National average |
---|---|---|
Kitchen remodeling | $5,000 to $45,000 | $19,920 |
Bathroom renovations | $2,907 to $20,000 | $9,274 |
Roof repairs | $150 to $1,950 | $653 |
Install new windows | $450 to $11,000 | $4,745 |
Exterior painting | $800 to $5,390 | $2,575 |
Interior painting | $400 to $4,000 | $1,656 |
Rank | Company | Score out of 100 possible points | Forbes Advisor Rating |
---|---|---|---|
1 | SoFi | 82.6 | 4.13 |
2 | LightStream | 80.6 | 4.03 |
3 | Marcus | 77.2 | 3.86 |
4 | Wells Fargo | 74.3 | 3.72 |
5 | Navy Federal | 73.7 | 3.69 |
5 | Upgrade | 71.7 | 3.59 |
Borrowers have several options when it comes to home improvement loans. Be sure to talk with your lender about the different loans you qualify for and that fit within your budget, while meeting your goals.
If you have equity in your home (and you want to refinance into a lower rate), you can do a cash-out refinance, which could allow you to get a new mortgage at rock-bottom rates.
There are also home equity loan products like a home equity line of credit (HELOC) that carries slightly higher interest rates than a cash-out refinance, but is much more cost-effective than most personal loans or credit cards.
Many lenders offer their own twist on home improvement loans, including unsecured home improvement loans (meaning they do not use your home as collateral). These loans typically have higher interest rates than secured loans, but the advantage is that you won’t lose your home if you cannot repay the loan.
Lender requirements vary. You might notice that home improvement loan requirements are stricter than mortgages, which is often because the loan is not secured by an asset.
Often, minimum credit score requirements are not advertised on lenders’ websites, so you’ll want to contact them directly and find out what you need to qualify. In addition to credit score, find out if there are minimum debt-to-income ratio and asset requirements.
Home improvement loans typically have terms between one and seven years, depending on your lender. Your credit score and overall creditworthiness determine the terms you’ll receive. To receive the most favorable terms, aim to have a credit score of at least 720.
Jordan Tarver is the assistant editor for loans at Forbes Advisor. Before joining Forbes Advisor, Jordan was an editor and writer for multiple finance sites, focusing on loans, credit cards and bank accounts. His goal is to create actionable content that enables people to make sound personal financial decisions. When he is not working on personal finance content, Jordan is a self-help author and world traveler who helps people experience the world and discover themselves.