Home Improvement Loan Rates 2026

Hear from our editors: Best home improvement loans for 2026

Updated October 30, 2026

Editorial Note: Intuit Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our third-party advertisers don’t review, approve or endorse our editorial content. Information about financial products not offered on Credit Karma is collected independently. Our content is accurate to the best of our knowledge when posted.

Written by: Erica Gellerman, CPA

Edited by: Erin Dunn, Managing Editor, Loans

Home improvement projects can get expensive quickly, which makes choosing the right financing option just as important as picking the right contractor or materials.

Whether you’re applying for an unsecured personal loan, tapping your home’s equity with a HELOC or weighing another option, the best fit will depend on your budget, timeline and comfort level with risk. The right financing can help you finish your project without putting unnecessary strain on your finances.

We’ll walk through four common ways to borrow when you’re looking to pay for home improvements.

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• Home equity loans
• Home equity lines of credit
• Cash-out refinancing
• Personal loans
• Our picks for best home improvement loans
• FAQs about home improvement loans

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Home equity loans

A home equity loan is a secured loan for a fixed amount of money. A secured loan means that you’ve agreed to use a property — in this case, your home — as collateral.

How does a home equity loan work?

When you apply for a home equity loan, the lender will determine how much you qualify to borrow based on several factors, including how much equity you have in your home. Your equity is figured by subtracting how much you still owe on your mortgage from the market value of your home. You’re typically limited to borrowing an amount of 80% to 85% or less of the equity in your home (including the new loan amount).

The lender also often considers factors like your income, debt and credit history before deciding exactly how much you can borrow.

Here’s an example of how that can break down.

• Say your home’s been appraised at $500,000 (its market value) and you owe $300,000 on your mortgage.
• The difference is the equity you have in your home, in this case $200,000.
• To keep an 80% loan-to-value ratio, you could potentially be approved for up to $100,000 ($400,000/ $500,000) with a home equity loan.

Similar to a mortgage, with a home equity loan you’ll receive a lump sum of money at one time, and you’ll be charged interest over a fixed repayment period (typically 10 to 15 years).

Other things to consider

• Fees — Just like when you took out your first mortgage, you’ll be required to pay fees for a home equity loan. These fees can include an application fee, appraisal fee, broker fees and others.
• Home sale — If you sell your home while you have a home equity loan outstanding, your loan might become due, depending on the terms (another reason why it’s important to read your loan’s terms carefully). It’s known as your “second” mortgage because this debt will be repaid after your original mortgage is paid off during a home sale.
• Property risk — If you’re unable to make the monthly payments, the lender might be able to force you to sell the home.

Is a home equity loan right for me?

Taking a lump sum all at once can be helpful if you need a set amount of money for a specific purpose — like remodeling your home — making a home equity loan useful.

Home equity lines of credit

A home equity line of credit, or HELOC, is another type of secured home improvement loan that uses your home as collateral. While it’s similar to a home equity loan, there’s a big difference in how the money is disbursed.

You’ll be approved for a specific amount of credit, but you won’t receive the money in a lump sum like you would with a home equity loan. Instead, you’ll be able to borrow money up to your set limit during a draw period (the time frame during which you can withdraw funds).

How does a HELOC work?

Just as with a home equity loan, a lender will consider your financial details and may approve a HELOC of up to 85% of your equity in your home.

During the draw period, you can typically access funds as needed up to your credit limit, such as by writing checks, using a card tied to the account or requesting transfers, depending on your lender’s terms.

Depending on the terms of your HELOC, you may make interest-only payments during the draw period and then enter a repayment period where you make principal-and-interest payments over a set number of years. Some plans may require a balloon payment when the draw period ends.

Your draw period can last a long time. For example, some HELOCS offer draw periods that last for 10 years.

If during the draw period your home value decreases significantly, or your financial circumstances change, your lender may be able to decrease the amount of credit available or freeze your ability to draw more money.

HELOCs also often come with variable interest rates, meaning your interest rate and monthly loan payment could change during the loan (this is true for home equity loans with variable rates, too).

Other things to consider

• Fees — You’ll be charged fees that are very similar to what you paid when you got your original mortgage. This can include appraisal fees, application fees, closing costs and attorney fees. Additionally, you may be charged ongoing maintenance fees, annual membership fees and transaction fees each time you make a loan withdrawal, so be sure to review the full fee schedule.
• Balloon payment — If your HELOC doesn’t have a specific repayment period at the end of the draw period, you might be required to pay off the entire loan as a “balloon payment” once the draw period ends. But it depends on what’s laid out in your agreement. Be sure to read through your HELOC’s terms carefully.
• Home sale — If you sell your home while you still have a balance on your line of credit, most lenders require you to pay back what you owe at the same time.
• Restrictions on withdrawals — A HELOC is set up so you can withdraw money when you need it, but lenders sometimes include extra restrictions that you need to follow. This can include a minimum amount required for each withdrawal or a requirement that you keep a minimum amount outstanding on the loan.

Is a HELOC right for me?

A HELOC is helpful if you have several projects you want to work on over a period of time and don’t want to have to apply for a new loan each time.

Just make sure you’re comfortable with any potential rate changes or balloon payments that might apply if you go this route. And remember, read your terms thoroughly so that you understand the fees and any restrictions involved before you move forward.

Cash-out refinancing

A cash-out refinance is a process where you pay off your current mortgage and replace it with a new, larger mortgage, allowing you to tap into your existing home equity by taking out the difference as a cash withdrawal.

How does a cash-out refinance work?

The amount of money you’ll be able to access with a cash-out refinance will depend on how much equity you have in your home. Generally, you can expect to withdraw a maximum of 80% of your home’s value, also known as the loan-to-value, or LTV, ratio.

Keep in mind that since you’re taking out an entirely new mortgage, your interest rate, loan terms and monthly payment may also be different.

Other things to consider

• Fees — When you refinance your home, you may have to pay closing costs, which  can typically range from 3% to 6% of your outstanding loan balance. These costs may include application fees, loan origination, appraisal fees and more. This can sometimes add up to hundreds or thousands of dollars, so it’s important to weigh the cost of refinancing versus the amount of cash you’ll be able to access.
• Interest rate — Refinancing means you’ll have new mortgage terms, including a new interest rate, which could be higher or lower than your current rate. Be sure to consider the trade-off between accessing cash and changing your current rate and loan term.
• Monthly payment — Remember that you’re taking out a larger mortgage. Depending on your interest rate and your new mortgage term, you may end up with a larger monthly payment. It’s important to make sure you can afford your new mortgage payments so you don’t risk defaulting and possibly losing your home.

Is a cash-out refinance right for me?

If you have a significant amount of equity in your home, a cash-out refinance can allow you to access the funds for a variety of purposes. When you’re able to refinance for a lower interest rate, this can be an excellent option. Otherwise, you’ll need to do the math and decide whether the fees, term and monthly payment make sense for your budget.

Personal loans

In contrast to a home equity loan or a HELOC, a personal loan often is an unsecured loan.

With an unsecured personal loan, there is no property used as collateral. Since the lender doesn’t have the option of foreclosing on your home if you don’t repay the loan, it’s considered riskier for the lender. Because of this, lenders usually charge a higher interest rate on unsecured loans.

How does a personal loan work?

When you apply for a personal loan, the lender’s decision about whether to approve your loan and how much to lend to you isn’t tied directly to the value of your home. Instead, the lender will make its decision by looking at different things, like your income, debt, credit reports, how you’ll use the money and other factors.

The approval process for a personal loan can be quick — it can even be completed the same day in some instances. You’ll begin making monthly loan payments soon after receiving your money.

Other things to consider

• Term length — The term length for personal loans can be shorter than for home equity loans or HELOCs. It’s common to see a term length from three to seven years.
• Fees — You typically won’t see as many fees for a personal loan as you will for a home equity loan or HELOC, but you still need to be aware of what the lender is charging. Watch out for loan origination fees, in particular.

Is a personal loan for home improvements right for me?

A personal loan may be your best choice if you have good credit but don’t have much equity in your home yet. It also may be a good choice if you only need to borrow a small amount.

Or a personal loan may also be preferable if you’re wary of putting your home up as collateral and don’t mind paying a higher interest rate.

Our picks for best home improvement loans

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. Most of 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: LightStream’s competitive interest rates, combined with an APR discount for autopay enrollment and a rate-beat program, make this lender a top choice for high-cost home improvement projects.

Pros

• Large loan amounts available
• No origination, late or prepayment fees
• Long repayment terms

Cons

• No option to prequalify
• Good-to-excellent credit required for approval

Read reviews of LightStream personal loans to learn more.

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 getting a lower interest rate.

Pros

• Prequalification available
• Large loan amounts available ($5,000 to $100,000)
• No prepayment penalties
• Access to member benefits like financial planning

Cons

• Origination fees of 0% to 7%

Read reviews of SoFi personal loans to learn more.

Best for smaller home projects: Discover

Why Discover stands out: Discover offers personal loans of up to $40,000, which makes this lender a good fit for small- to mid-size home projects.

Pros

• No fees
• Competitive rates
• Flexible loan terms (between 3 and 7 years)
• Next-day funding possible

Cons

• Maximum loan amount is lower than some competitors

Read reviews of Discover personal loans.

Best for a fixed rate HELOC: Figure HELOC

Why Figure stands out: Figure’s HELOC offers a fixed rate instead of the variable rate you’ll see with many HELOCs, which fluctuates based on the prime rate. In exchange, you’re required to withdraw the full amount of your credit line at closing. As you pay down your balance, you may be able to take additional draws during the draw period, but each new draw will come with its own interest rate.

Pros

• No in-person appraisal required
• Fully online application
• Prequalification option

Cons

• Not a traditional revolving HELOC
• Origination fee

Read our full review of Figure HELOCs.

Our methodology: How we pick the best personal loans

Credit Karma’s editors evaluate the best personal loans by reviewing key features of dozens of popular lenders. Those features fall into three important categories:

• Affordability: We start by checking if a lender’s rates are competitive: are they higher than average or are they lower than many competitors? From there, we analyze if fees — particularly an origination fee — may make your loan more unaffordable. Last, we’ll check if the lender offers rate discounts for items such as automatic payments that may reduce your rate.
• Customer-friendly features: Taking out a personal loan is a big financial commitment, so we prioritize lenders that make things easier for you. For instance, do they offer a wide range of loan amounts for people with different borrowing needs? Do they offer at least several loan terms to give you more flexibility with your monthly payment? And, crucially, can they fund your loan quickly? A lender will also get bonus points for offering direct payments for debt consolidation or other customer-friendly features.
• Transparency: We believe personal loan terms should be easy to find and decipher. Prequalification, which lets you check what rate you may qualify for without a hard credit inquiry, is particularly important. We also check to see if a lender has been recently penalized by regulators.

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Next steps

When you’re considering a loan to help finance your home improvements, there isn’t a one-size-fits-all loan that works for every situation. Explore the loan options available to you to see which option best fits your needs.