Best Home Improvement Loans

SoFi offers more competitive rates and large loan amounts

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Home improvement loans allow you to finance home repairs and updates, which can improve your home’s retail value and aesthetic appeal. With popular remodeling projects like kitchens and bathrooms costing over $20,000, many homeowners can only afford these projects through a home improvement loan.

The best home improvement loans have low rates, few fees, and flexible loan amounts. These loans should also feature an easy application process, fast approval time, and reasonable repayment terms.

Best Home Improvement Loans of December 2021

Best Overall : SoFi


SoFi

 SoFi

  • Starting Interest Rate: 4.99%
  • Minimum Credit Score: 680
  • Loan Terms: 24 to 84 months
Why We Chose It

SoFi’s home improvement loans come with competitive interest rates along with a high maximum loan amount of $100,000 that will cover most home improvement projects.

Pros & Cons
Pros
  • Competitive interest rates

  • High maximum loan amount

  • No late fees, prepayment fees, or origination fees

Cons
  • Slow funding time

  • Good credit recommended to qualify

  • High income recommended to qualify

Overview

Other important information:

  • Maximum/minimum amount you can borrow: $5,000 (in most states) to $100,000
  • APR range: 4.99%–19.53% (with AutoPay discount—invoicing option 0.25% higher)
  • Fees: None
  • Minimum recommended credit score: Reported to be 680, but not disclosed on website
  • Other qualification requirements: SoFi will consider your credit history, income, and employment status in your loan application.
  • Repayment terms: 2 to 7 years
  • Time to receive funds: Typical funding can take up to a week, from loan approval to the receipt of funds.
  • Restrictions: You must be 18 or older and a U.S. citizen (or Permanent Resident or visa holder) to qualify for a personal loan. Mississippi residents are ineligible for a SoFi loan.
  • Notes: While SoFi allows multiple personal loans for individuals, Michigan residents can only have one SoFi personal loan at a time.

Read the full review: SoFi Personal Loans

Best for Bad Credit : Avant


Avant

 Avant

  • Starting Interest Rate: 9.95%
  • Minimum Credit Score: 580
  • Loan Terms: 24 to 60 months
Why We Chose It

Avant offers home improvement loans even to borrowers with less-than-stellar credit, and features an easy application process and quick funding.

Pros & Cons
Pros
  • Quick funding time

  • Borrowers can prequalify

  • Available to borrowers with poor credit

Cons
  • Administrative fee of up to 4.75%

  • Higher than average interest rates

  • Low maximum loan amount

Overview

Other important information:

  • Maximum/minimum amount you can borrow: $2,000 to $35,000
  • APR range: 9.95%–35.99%
  • Fees: Administration fee may be as high as 4.75%. Late fee of $25 charged when a payment is 10 days past due. A $15 fee is assessed for returned payments.
  • Minimum recommended credit score: Reported to be 580, but Avant states that most customers have a credit score between 600–700.
  • Other qualification requirements: In addition to your creditworthiness, Avant will consider your income and employment status when you apply for financing. You must submit proof an active personal checking or savings account. If self-employed, you’ll also need to submit your 2 most recent tax returns with your loan application.
  • Repayment terms: 24 to 60 months
  • Time to receive funds: You’ll typically receive a direct deposit of your loan funds by the next business day (if your application is approved by 4:30 p.m. CT on a weekday)
  • Notes: The actual loan amount, term, and APR amount of loan a customer qualifies for may vary based on credit determination and state law. Minimum loan amounts vary by state. The minimum loan amount in MA is $6,400.

Read the full review: Avant Personal Loans

Best Rates : LightStream


LightStream logo
  • Starting Interest Rate: 3.99%
  • Minimum Credit Score: 680
  • Loan Terms: 24 to 144 months
Why We Chose It

Lightstream has some of the most competitive rates for home improvement loans, along with same-day funding in some cases.

Pros & Cons
Pros
  • Low rates starting at 3.99%

  • Same day funding

  • High maximum loan amounts

Cons
  • No pre-approval option

  • Borrowers with poor credit may not qualify

  • 3.99% APR only applies to loans of $10,000 to $24,999

Overview

Other important information:

  • Maximum/minimum amount you can borrow: $5,000 to $100,000
  • APR range: 3.99%–16.99% (with AutoPay discount—invoicing option 0.50% higher)
  • Fees: None (Note: For Florida residents, a documentary stamp tax may apply.)
  • Minimum recommended credit score: Reported to be 680 (though not confirmed on LightStream’s website)
  • Other qualification requirements: LightStream caters to borrowers with good to excellent credit. If you have several years of credit history and a mixture of account types on your credit report (credit cards, installment loans, mortgage, etc.), you may be in luck. LightStream will also consider your ability to save, your income, and your current debts. 
  • Repayment terms: 2 to 12 years 
  • Time to receive funds: Funds may be deposited into your bank account the same day you apply for a loan.
  • Restrictions: LightStream won’t issue loans to cover education costs, to refinance existing LightStream loans, or to be used by a business.
  • Notes: The loan terms, including APR, may differ based on loan purpose and credit profile. The maximum APR for a LightStream loan is 20.49%. Rates and terms are subject to change without notice. As part of its Rate Beat Program, Lightstream will offer a rate that is 0.10% lower than that of a competing lender if you provide proof that you have been approved for a loan at a lower rate from another lender by 2 p.m. ET 1 business day prior to your loan funding.

Read the full review: LightStream Personal Loans

Best Brick-and-Mortar Lender : Wells Fargo


Wells Fargo Logo

 Wells Fargo Logo

  • Starting Interest Rate: 5.74%
  • Minimum Credit Score: 620
  • Loan Terms: 12 to 84 months
Why We Chose It

If you’re looking for a home improvement loan from a brick and mortar bank, then Wells Fargo is a great option. Loan amounts start at $3,000 for minor home improvement projects, and you can speak to a representative at a physical bank branch if needed.

Pros & Cons
Pros
  • Small loan amounts available

  • No origination fees or pre-payment penalties

  • Physical bank locations

Cons
  • Slow application process

  • Hard credit inquiry may be required

  • Only Wells Fargo customers can apply online or by phone

Overview

Other important information:

  • Maximum/minimum amount you can borrow: $3,000 to $100,000
  • APR range: 5.74%–19.99% (with 0.25% relationship discount)
  • Fees: No origination fees or pre-payment penalties. Late fees or returned payment fees may be assessed.
  • Minimum recommended credit score: Not disclosed, but the Wells Fargo Rate and Payment Calculator indicate that you might qualify for a loan with a credit score as low as 620.
  • Other qualification requirements: Your credit, income, and expenses (aka your debt-to-income ratio) will all be assessed to determine if you’re eligible for a loan.
  • Repayment terms: 12 to 84 months (12 to 36 months for loans under $5,000)
  • Time to receive funds: Once your application is approved, personal loan funds may be available by the next business day.
  • Restrictions: You must either be a U.S. Citizen or Permanent Resident to qualify.

Read the full review: Wells Fargo Personal Loans

Best for Lack of Credit History : Upstart


Upstart Logo
  • Starting Interest Rate: 6.95%
  • Minimum Credit Score: 600
  • Loan Terms: 36 to 60 months
Why We Chose It

For borrowers who haven’t yet built up an extensive credit history, Upstart offers flexible home improvement loans, with the ability to unlock lower rates based on education and employment.

Pros & Cons
Pros
  • Lower rates based on education or job history

  • Borrowers can prequalify

  • Flexible loan amounts

Cons
  • Origination fee of up to 8%

  • High average APR of 25.79% on a 3-year loan

  • Charges late fees, returned check fees, and ACH fees

Overview

Other important information:

  • Maximum/minimum amount you can borrow: $1,000 to $50,000, based on credit, income, and other information considered in your application.
  • Typical APR range: 6.76%–35.99%
  • Fees: Possible origination fee of 0% to 8%. Late fees are 5% of the past due balance or $15, whichever is greater. Returned check and ACH fees are $15. There is no pre-payment penalty.
  • Minimum recommended credit score: 600
  • Other qualification requirements: You must be at least 18 years old, with a valid Social Security number and valid email address. Your credit report cannot show any bankruptcies, currently past-due accounts, or more than 6 inquiries in the last 6 months. Even if you lack credit history to produce a FICO score, your debt-to-income ratio must fall within an acceptable range. Finally, you must have be employed full-time or enlisted in the military.
  • Repayment terms: 3 or 5 years
  • Time to receive funds: Funds may be available as soon as the next business day, once you accept your offer, or 2 days if you accept after 5 p.m. ET.
  • Restrictions: Loans unavailable to residents of Iowa or West Virginia, or anyone without a U.S. residential street address (outside of the military.)
  • Notes: Minimum loan amounts vary by state. The minimum loan amount in MA is $7,000. The minimum in Ohio is $6,000. The minimum in NM is $5,100. The minimum loan amount in GA is $3,100.
    Proceeds used to fund education-related expenses are subject to a wait period of 3 business days between acceptance and funding in accordance with federal law.
    The full range of available rates varies by state. The average 3-year loan offered across all lenders using the Upstart platform will have an APR of 25.16% and 36 monthly payments of $37 per $1,000 borrowed.
    When you check your rate, the initial (soft) inquiry will not affect your credit score. If you accept your rate and proceed with your application, there will be another (hard) credit inquiry that will impact your credit score. If you take out a loan, repayment information will be reported to the credit bureaus.

Read the full review: Upstart Personal Loans

Best for Veterans : USAA


USAA

 USAA

  • Starting Interest Rate: 7.24%
  • Minimum Credit Score: 600
  • Loan Terms: 12 to 84 months
Why We Chose It

Only available to members of the armed forces, veterans, and their families, USAA’s home improvement loans come with flexible term lengths and funding as soon as the next day.

Pros & Cons
Pros
  • Long term lengths

  • Next day funding

  • Autopay rate discount

Cons
  • USAA membership and bank account required

  • Low maximum loan amount

  • Borrowers can’t prequalify

Overview

Other important information:

  • Maximum/minimum amount you can borrow: $2,500 to $100,000
  • APR range: 7.24%–18.51%
  • Fees: No application fees or pre-payment penalties
  • Minimum recommended credit score: It is reported that USAA accepts subprime borrowers with scores as low as 600, but no minimum credit score is disclosed on the website.
  • Other qualification requirements: USAA membership
  • Repayment terms: 12 to 84 months
  • Time to receive funds: Within 24 hours to your USAA Bank account
  • Restrictions: Open to residents in all 50 states. Only those who are USAA members with a USAA Bank account can receive a personal loan.
  • Notes: Financing for 12- to 36-month term requires a loan amount of $2,500 or greater. Financing for 48-month term requires a loan amount of $5,000 or greater. Financing for 60-month term requires a loan amount of $10,000 or greater. Financing for 72-month term requires a loan amount of $15,000 or greater. Financing for 84-month term requires a loan amount of $20,000 or greater.

Read the full review: USAA Personal Loans

Best for Small Loans : PenFed Credit Union


PFCU

 PFCU

  • Starting Interest Rate: 5.99%
  • Minimum Credit Score: N/A
  • Loan Terms: 6 to 60 months
Why We Chose It

If you only need a small loan to finance a minor home improvement project, PenFed’s loans have low minimum amounts and few fees.

Pros & Cons
Pros
  • Competitive rates for borrowers with poor credit

  • Low loan amounts available

  • No origination or prepayment fees

Cons
  • Must be a PenFed Credit Union member

  • Borrowers can’t prequalify

  • Low maximum loan amount

Overview

Other important information:

  • Maximum/minimum amount you can borrow: $600 to $20,000
  • APR range: 5.99%–17.99%
  • Fees: No origination fee or early repayment fee. There is a $30 charge for a returned payment and a $20-25 charge for late payments.
  • Minimum recommended credit score: Not disclosed. Those with excellent credit history will be eligible for the best rates.
  • Other qualification requirements: PenFed will take your income, debts and credit history into consideration, including your co-borrower’s if submitting a joint application.   
  • Repayment terms: 6 to 60 months
  • Time to receive funds: Could be as fast as the next business day
  • Restrictions: Borrowers need to become a member of the credit union

Read the full review: PenFed Federal Credit Union Personal Loans

Best for Fair Credit : Peerform


PF
  • Starting Interest Rate: 5.99%
  • Minimum Credit Score: 600
  • Loan Terms: 36 to 60 months
Why We Chose It

Peerform offers loans with affordable rates for borrowers with fair credit, with a minimum required credit score of 600.

Pros & Cons
Pros
  • No prepayment penalty

  • Good for borrowers with fair credit

  • Borrowers can prequalify

Cons
  • Charges origination, returned check, ACH, and late fees

  • Limited loan amount options

  • Debt-to-income ratio must be under 40%

Overview

Other important information:

  • Maximum/minimum amount you can borrow: $4,000 to $25,000
  • APR range: 5.99%–29.99%
  • Fees: Origination fee of 1% to 5%. Late fees are 5% of the payment or $15, whichever is greater (after 15 days past due). Returned check and ACH fees are $15. There is no pre-payment penalty.
  • Minimum recommended credit score: 600
  • Other qualification requirements: Need to have at least one year of credit history without any current delinquencies or recent bankruptcies and reflecting at least one open account and a minimum of one revolving account ever opened. Your debt-to-income ratio must be below 40% as calculated by Peerform.
  • Repayment terms: 36 to 60 months
  • Time to receive funds: Within 3 business days once application is finalized
  • Restrictions: Borrowers cannot refinance a Peerform loan

Read the full review: Peerform Personal Loans

Final Verdict

There are lots of options to choose from when it comes to home improvement loans. Many lenders offer low rates and few fees for home improvement loans, while others lend even to borrowers with poor to fair credit. Our top choice for a home improvement loan is SoFi.

SoFi offers loans with low rates and high maximum amounts that can cover a wide range of home improvement projects. It’s easy to apply for a loan online, and the loans feature no late fees, prepayment fees, or origination fees. Although applicants will need good credit to qualify, home improvement loans from SoFi are a great choice for eligible borrowers.

Compare The Best Home Improvement Loans

Company Starting Interest Rate  Minimum Recommended Credit Score  Loan Terms (range) Maximum Loan Amount 
SoFi Best Overall 4.99% 680 24 to 84 months $100,000
Avant Best for Bad Credit  9.95%  580  24 to 60 months  $35,000 
LightStream Best Rates  3.99%  680  24 to 144 months  $100,000 
Wells Fargo Best Brick-and-Mortar Lender  5.74%  620  12 to 84 months  $100,000 
Upstart Best for Lack of Credit History  6.95%  600  36 to 60 months  $50,000 
USAA Best for Veterans  7.24%  600  12 to 84 months  $100,000 
PenFed Credit Union Best for Small Loans  5.99%  N/A 6 to 60 months  $20,000 
Peerform Best for Fair Credit  5.99%  600  36 to 60 months  $25,000 

How Do You Determine Your Home Improvement Loan Needs?

In order to figure out what type of home improvement loan is best for you, start by getting a sense of the type of home improvement project you need the loan to cover. You should decide on a project, estimate costs, and get quotes from contractors in order to determine what size loan you’ll need.

Smaller projects may only require a loan of a few thousand dollars, while more extensive renovations could cost tens or even hundreds of thousands of dollars. For example, if you’re renovating your entire kitchen, you may need a loan of anywhere from $20,000 to $50,000. On the other hand, if you’re just completing a small project like repainting a room or two in your house, you may only need a $1,000 to $2,000 loan.

You should also consider loan terms when deciding on a loan. While loans with longer terms will have smaller monthly payments, you’ll end up paying more in interest over time. With this in mind, you should choose the shortest term length that you can comfortably afford.

How Do You Compare Home Improvement Lenders?

It’s important to compare home improvement lenders to make sure that you’re getting the best possible deal on a home improvement loan. Some factors you should consider include:

  • Interest rate: The lower in the interest rate, the less you’ll end up having to pay over the course of the loan. Borrowers with excellent credit will be able to qualify for the lowest rates, but you should be sure to compare rates from different lenders in order to make sure that you’re getting the best deal possible.
  • Loan amount: Depending on what type of home improvement project you have planned, you may need a loan of anywhere from a few thousand dollars to tens of thousands of dollars. You should look for a lender that offers loan amounts that meet your needs.
  • Required credit score: Not all lenders will approve applications from borrowers with poor credit. If your credit score isn’t where you want it to be, look for a loan from a lender that works with your credit score range.
  • Customer service: Hard numbers aren’t the only factors you should consider when deciding on a lender - qualitative features like customer satisfaction should also play a role in your decision. Look for a lender with a history of strong customer service and few complaints.

How Do You Apply for a Home Improvement Loan?

There are a few things you’ll need to do in order to apply for a home improvement loan. In most cases, the process is very similar to applying for other types of personal loans. Some smaller lenders may require an in-person application, but most lenders allow you to apply online.

You should make sure that you have your finances in order before you apply. Most lenders require a credit score of at least 600, although some lenders will issue loans to borrowers with scores as low as 680. In general, the higher your credit score, the more loans you’ll qualify for and the better rates you’ll be offered. If your credit isn’t yet where you want it to be, you should take steps to raise your score before applying for a loan, including making on time payments, reducing your credit utilization, and keeping old accounts open.

You should also gather documentation that is typically required for a home improvement loan application, including your W2s or pay stubs, proof of address, mortgage, and any other relevant financial information.

How Do Home Improvement Loans Work?

The term home improvement loan can describe a few different financial products. Personal loans for home improvement (secured and unsecured), home equity loans, and home equity lines of credit are 3 popular options.

Though all 3 of these loans have different features, they also have something in common. If you qualify for financing, a lender will lend you the money you can use toward a home improvement or repair project. In exchange, you’ll repay the money you borrowed, along with interest and possibly fees, over time.

Many home improvement loans are reported to the 3 credit bureaus. It’s important that you consistently make your payments on time if you want to protect your credit scores. And doing so can help them, of course.

Once you decide to borrow money for home improvements, there are numerous lenders who may be able to help you: online lenders, banks, and credit unions.

Are Home Improvement Loans Tax Deductible?

The Tax Cuts and Jobs Act changed many of the deductions that were once available to taxpayers. Yet, according to the IRS, the interest paid on home equity loans, home equity lines of credit, and second mortgages may still be deducted from your taxes in many cases.

To deduct loan interest from your taxes, the funds you borrowed must have been used to “build or substantially improve” the home that secures the loan. All the loans described above are secured loans.

Therefore, if you use an unsecured loan to fund your home renovation, you might not be able to deduct the interest you pay. Confirm your situation with an accountant, tax attorney, or other tax advisor.

Can I Borrow More On My Mortgage for Home Improvement?

A mortgage is a type of installment loan. Unlike revolving credit cards and credit lines that let you borrow money, pay it back, and borrow again, an installment loan is issued in a lump sum. You can’t go back to your lender and ask for more money on your existing mortgage—for home improvements or for anything else.

You can, however, consider a cash-out refinance. With a cash-out refinance, you apply for and (if approved) take out a new loan to pay off your existing mortgage. Assuming the equity in your home has increased, you may walk away from the closing table with some extra funds in your pocket.

Imagine you owe $150,000 on a home that’s worth $250,000. If you have good credit and can satisfy a lender’s other requirements (income, employment, debt, etc.), you might be able to borrow $200,000 in a cash-out refinance. Once your existing mortgage of $150,000 is paid off, you could use the extra $50,000 toward your home improvement project.

Note: Refinancing your mortgage isn’t always a great idea, so weigh the pros and cons before taking this step.

Methodology

Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of personal loan lenders for all borrowing needs. We collected over 25 data points, including interest rates, fees, loan amounts and repayment terms, across more than 50 lenders to ensure that our content helps users make the right borrowing decision for their needs.

Article Sources

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  1. IRS. "Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses)." Accessed Nov. 24, 2021.