Best Home Improvement Loans of September 2024 - NerdWallet (2024)

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• Payments are fixed. Personal loans have fixed monthly payments, so you can reliably budget for them.

• Funding is fast. Online applications typically take a few minutes, and funds are often available within a day or two, while funds from a HELOC or home equity loan can take a few weeks to become available.

• No collateral required. Unlike an auto or home loan, unsecured personal loans don’t require collateral, so the lender can’t take your possessions if you don’t make the payments.

• They can have high rates. Because the loan is unsecured, the interest rate may be higher than on a home equity loan or home equity line of credit, which typically have single-digit rates.

• No tax benefits. You can’t claim a tax deduction on the interest paid on home improvement loans as you might be able to do with mortgage interest.

• Annual percentage rate: APRs represent the entire cost of the loan, including fees the lender may charge. If you’re a member of a credit union, that may be the best place to start. The maximum APR at federal credit unions is 18%.

• Monthly payment: Even if you get a low rate, be sure the monthly payments fit into your budget. Use a home improvement loan calculator to see what loan amount, rate and repayment term you need to get an affordable monthly payment.

• Loan amount: Some lenders cap amounts at $35,000 or $40,000. If you think your project will cost more than that, look for a lender that offers larger loans.

• Loan term: A loan with a long repayment term may have low monthly payments, but you’ll pay more interest over the life of that loan than one with a shorter repayment term.

• Ability to add a co-signer or co-borrower: Some lenders let you add a co-signer or co-borrower to your application. Adding someone with better credit or higher income to the loan application may reduce your APR or increase the amount you can borrow.

» MORE: Current average personal loan rates

» MORE: Where to get a personal loan

1. Get a firm cost estimate. Identify the size of your project and get quotes or estimates to determine how much you need to borrow. Knowing the total cost can help you decide which financing option is best.

2. Compare options. Compare the best home improvement lenders against other financing options, like credit cards and home equity financing. You're looking for the one that costs the least in total interest, has affordable monthly payments and fits your project cost and timeline.

3. Check your rate and monthly payments. Many online lenders and some banks let borrowers pre-qualify to see potential personal loan offers before applying. Pre-qualifying involves a soft credit pull that doesn’t impact your score.

4. Prepare documents. Once you've chosen a lender, gather the documents you'll need to apply. This can include W-2s, pay stubs, proof of address and financial information.

5. Apply. You may have to apply in person at smaller banks and credit unions, but larger ones and online lenders have online applications. Many lenders can give you a decision the same day you apply. After that, expect to see the funds in your bank account in less than a week.

» MORE: Personal loan application requirements

• How much can you borrow with a home improvement loan?

  Home improvement loan amounts range from $1,000 to $100,000. You receive the loan all at once and repay it with interest over two to 12 years.

• What type of loan is best for home improvements?

  The best way to finance home improvements depends on factors such as your home equity, how much money you need to borrow and your credit score. Compare home improvement loans with home equity loans, home equity lines of credit, cash-out refinancing and federal programs.

• What are home improvement loan rates?

  Home improvement loan rates typically range from about 6% to 36%. The best personal loan rates typically go to borrowers with high credit scores and credit histories showing consistent on-time payments toward other loans and credit cards.

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 search for a “Title I Property Improvement” lender in your state on the U.S. Department of Housing and Urban Development website.

» MORE: Home improvement tax credits for energy-saving updates

You can refinance your existing mortgage into a higher loan amount and use the difference to pay for your renovation.

NerdWallet’s review process evaluates and rates personal loan products from more than 35 technology companies and financial institutions. We collect over 50 data points from each lender and cross-check company websites, earnings reports and other public documents to confirm product details. We may also go through a lender’s pre-qualification flow and follow up with company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.

Our star ratings award points to lenders that offer consumer-friendly features, including: soft credit checks to pre-qualify, competitive interest rates and no fees, transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to credit bureaus and financial education. Our ratings award fewer points to lenders with practices that may make a loan difficult to repay on time, such as charging high annual percentage rates (above 36%), underwriting that does not adequately assess consumers’ ability to repay and lack of credit-building help. We also consider regulatory actions filed by agencies like the Consumer Financial Protection Bureau. We weigh these factors based on our assessment of which are the most important to consumers and how meaningfully they impact consumers’ experiences.