In a NutshellWhether your roof is leaking or you’re ready to design the kitchen of your dreams, home improvement loans can provide the funds you need to make repairs, renovate or add on to your home. We’ve made our picks for the best home improvement loans for small and large projects.
When you’re ready to tackle some of the home repairs or remodel projects on your to-do list, a home improvement loan can provide the money you need to take those projects from dream to reality.
We’ve rounded up our picks for the best home improvement loans based on factors like loan amounts and fees — and the ability to apply for prequalification. Prequalifying lets you see your estimated interest rates and costs before you apply formally and subject yourself to a hard credit inquiry, which can hurt your credit scores a bit.
Keep in mind these picks are for personal loans. You may have other options like a home equity loan or home equity line of credit.
Best for competitive rates: LightStream
Why LightStream stands out: Unlike many personal loan lenders that cap loan amounts at $40,000 or less, online lender LightStream offers loans up to $100,000. That makes it possible for qualified applicants to apply for the funds they need for larger-scale home improvements.
LightStream’s competitive interest rates, combined with an APR discount for autopay enrollment and a rate-beat program, really make it stand out.
- Competitive rates: LightStream offers competitive interest rates and an APR discount for people enrolled in autopay. The lender also has a rate-matching program that promises to beat competitor rates by a small percentage if certain conditions are met.
- Good credit necessary: LightStream loans are targeted for people with strong credit, and the company says people with “excellent” credit receive the lowest rates.
- No ability to prequalify: Applying for a home improvement loan with LightStream will result in a hard credit inquiry, which can lower your credit scores by a few points.
- Multiple repayment options: LightStream offers repayment terms of 24 months to 144 months, but if you opt for a longer loan term, you’ll likely pay more in interest over the life of the loan. Loan terms between 85 months and 144 months may only be available if you have a loan amount of at least $25,000.
Best for applying with a co-applicant: SoFi
Why SoFi stands out: SoFi lets people apply for a personal loan with a co-applicant. If your credit needs some work, applying with a co-applicant who has good credit may improve your chances of qualifying for a loan or snagging a lower interest rate. LightStream also lets you add co-applicants. But SoFi stands out because of its member perks and prequalification option.
Here’s what you should know about SoFi personal loans.
- Member perks: If SoFi approves you for a loan, you become a member of its community. As a member, you’ll get perks like unemployment protection under certain conditions, access to financial planners, referral bonuses, personalized career advice and more.
- Fees: SoFi doesn’t charge late or prepayment fees on its loans. Of course, if your loan payments are late, that may negatively affect your credit scores. It does charge origination fees of 0% to 6%.
- Loan amounts: While the minimum amount you can borrow may vary by state, SoFi offers loans ranging from $5,000 to $100,000 to accommodate home improvement projects of different sizes. If you apply through Credit Karma you may see different loan amounts and terms.
- Ability to prequalify: SoFi uses a soft credit inquiry to let people check their estimated rates and loan terms without affecting their credit scores before they submit a formal application. If you prequalify, keep in mind that your final approval or terms may change — and a formal application involves a hard credit inquiry.
What you should know about home improvement loans
There are several types of loans that can be used for home improvement projects — home equity loans, home equity lines of credit, or HELOCs, and personal loans. If those options aren’t appealing, you could also consider refinancing your home or tapping into a low-interest credit card with promotional terms.
Here’s what you should know about some of your borrowing options.
Home equity loans and home equity lines of credit
Home equity loans and HELOCs both allow you to borrow money based on any equity you have in your home. The amount can also vary based on your income, credit and other factors.
If you get a home equity loan or HELOC, your house becomes collateral. You may get a lower rate with this type of secured financing than you would with an unsecured personal loan. But you also may pay more fees because you may have to pay for closing costs just like you did when you got the original mortgage.
And if you default on your loan, the lender may foreclose on your house to recoup the money you owe. Before getting a home equity loan or HELOC, make sure you can repay the loan on time since you risk losing your home with this type of borrowing.
Many lenders offer personal loans that can be used to complete home improvement projects. A personal loan may be a good option if you don’t have enough equity in your home to qualify for a home equity loan or HELOC — or if you don’t want to use your home as collateral.
It’s a good idea to shop around, compare your financing options and make sure you can get a reasonable rate before you decide to use a personal loan for home improvements.
How we picked these loans
We reviewed more than a dozen home improvement loans from a variety of lenders to come up with our top picks. The criteria used to make our selections included interest rates, fee structures, loan amounts, prequalification options and other perks like rate-beat programs, on-time payment rewards and resources to help improve your financial health.