» MORE: Pre-qualify for a home improvement loan on NerdWallet
Details about home improvement loans
A personal loan used for home improvements is like any unsecured personal loan: It’s not guaranteed by your home, the rate you receive depends primarily on your creditworthiness and the rate and payments are usually fixed, which means you can reliably schedule monthly payments into your budget.
- Higher rates: Since the loan is unsecured, the interest rate may be higher than on a home equity loan or home equity line of credit. Rates from online lenders range from about 6% to 36%. Rates for home equity loans and HELOCs are usually in the single digits.
- Fast funding: Online applications typically take a few minutes, and funds are available within a day or two at some lenders. Learn how to get a personal loan for a smoother process.
- No tax benefits: You can’t claim a tax deduction on the interest on personal loans as you might be able to do with mortgage interest.
Estimate your home improvement loan rate
Interest rates on personal loans generally range from about 6% to 36%. As with most credit products, the rate you receive depends a lot on your credit score. The better your score, the lower your rate and the less interest you’ll pay over the life of the loan. The interest rate also affects your total monthly payment, as does the term length; a longer term means lower monthly payments, but more interest.
Use our personal loan calculator for home improvements to see estimated rates, total interest costs and payments for your home improvement loan.
» MORE: Best rates on personal loans
Home improvement loan uses
You can use home improvement loans for renovations like a kitchen remodel or they can help you cover fixes like a roof repair or replacement.
There are few limitations on how you spend the funds from an unsecured loan. You can finance a bathroom remodel, new deck or even a swimming pool with the money from a home improvement loan.
Home improvement loan alternatives
There are lenders that offer home improvement loans for bad credit, but if you don’t qualify or you want to try to get a lower rate, here are alternative options.
Credit unions: Your local credit union may be the best place to get a personal loan, especially if your credit is poor or average. The maximum annual percentage rate at federal credit unions is 18%.
Federal programs: Some government programs can help pay for a home renovation. The Federal Housing Administration has two programs: Title I loans and Energy Efficient Mortgages. You can look for a “Title I Home Improvement” lender in your state on the HUD website.
Credit cards: If you have excellent credit and a small- to medium-sized home improvement project, you can apply for a 0% interest credit card to cover the expenses. If you qualify, you’ll pay no interest charges for a promotional period, typically 12 to 18 months.
» MORE: Should you put your home renovation on a credit card?
Home equity loans and HELOCs: If you have equity in your home, you may be better off with a low-interest secured loan.
Both options are likely cheaper than personal loans, with longer repayment terms up to 20 years. Keep in mind that you can lose your home if you fail to repay the loan.
» MORE: Home equity loan vs. line of credit
Cash-out refinancing: You can refinance your existing mortgage into a higher loan amount and use the difference to pay for your renovation. Rates vary by lender, loan amount and the equity in your home.
» MORE: Compare home improvement financing options