How to Get a Home Improvement Loan
A home improvement loan helps you pay for repairs, remodeling, or upgrades without draining your savings.
If you are wondering how to get a home improvement loan, this guide breaks it down in simple steps. You will learn loan types, credit rules, interest rates, and how much you can borrow in the US.
What Is a Home Improvement Loan?
A home improvement loan is money borrowed to fund home repairs or upgrades. These improvements may include roofing, plumbing, maintenance, remodeling, or energy-efficient upgrades.
This type of loan can be:
- Unsecured, based on your credit score and income
- Secured, using your home equity as collateral
According to the Joint Center for Housing Studies of Harvard University, US homeowners spent over $567 billion on home improvements in 2023, showing strong demand for renovation funds.
Types of Home Improvement Loans
Personal Loans (Unsecured)
- No collateral required
- Fast approval and funding
- Higher interest rate than equity loans
- Best for small to mid-size home improvement projects
Home Equity Loan
- Fixed-rate, lump-sum loan
- Lower interest rate
- Uses home equity as collateral
- Stable monthly payment
HELOC (Home Equity Line of Credit)
- Borrow funds as needed
- Variable-rate or interest-only HELOC options
- Ideal for long-term renovation projects
Government & Local Programs
- FHA Title I Property Improvement Loans
- State or utility-backed renovation loans
- Designed for repairs and energy upgrades
How to Get a Home Improvement Loan Step by Step
1. Check Your Credit Profile
Review your credit report and FICO® Score. Lenders assess creditworthiness, financial history, and debt-to-income ratio.
2. Estimate Project Costs
Get contractor estimates or price materials. Clear cost planning prevents overborrowing.
3. Choose the Right Loan Type
Short projects may fit a personal loan. Large renovations often work better with home equity products.
4. Compare Lenders and Offers
Compare interest rate, loan terms, application fee, and monthly payment. Always review the total repayment cost.
5. Submit an Application
You may need income documents, banking details, and personal information. After you submit, you will receive a confirmation number.
6. Review Terms and Receive Funds
Check the offer carefully before accepting. Funds may arrive the same day or within a week.
Credit Score Requirements
Credit score plays a major role in approval and pricing.
- 720+: Best interest rate and loan terms
- 580–669: Higher APR and lower loan amount
- Below 580: Limited options and short repayment periods
Federal Reserve data shows borrowers with strong credit pay over 6% less in average APR compared to fair-credit applicants.
Can You Get a Home Improvement Loan With Bad Credit?
Yes, but expect trade-offs.
Bad-credit lenders focus on:
- Income stability
- Bank account history
- Ability to repay
Rates are higher, and loan terms are shorter. In some cases, people explore short-term cash solutions similar to those discussed in resources like loans similar to SpotLoan or alternatives to Speedy Cash, especially when traditional banks decline applications. These options should be reviewed carefully and used responsibly.
How Much Can You Borrow?
Loan limits depend on income, credit score, and equity.
- Personal loan: $500 to $50,000
- Home equity loan: up to 80–85% loan-to-value
- HELOC: based on home value and lender credit limits
Higher equity and lower debt usually mean more available funds.
Interest Rates and Repayment Terms
- Interest rate range: 6% to 200%+, depending on credit
- Loan terms: 2 months to 15 years
- Fixed-rate loans offer stable payments
- Variable-rate HELOCs may change over time
Even a 2% difference in APR can add thousands to long-term renovation costs.
Popular Home Improvement Loan Lenders in the USA
(Examples only, not endorsements)
- SoFi – Large loan amounts for strong credit
- LightStream – Competitive rates, no fees
- Wells Fargo – Home equity products and banking services
- Navy Federal – Member-focused lending
- First Citizens Digital Banking – Personal loan options
Always check each lender’s privacy policy and security standards before sharing information.
Home Improvement Loan vs Other Financing Options
Credit Cards
- Fast and flexible
- High interest rate
- Best for small repairs
Cash-Out Refinance
- Lower rate
- Replaces existing mortgage
- Higher closing costs
Contractor Financing
- Convenient
- Limited transparency
- Often higher rates
Common Mistakes to Avoid
- Borrowing more than needed
- Ignoring total repayment cost
- Skipping lender comparisons
- Falling for “guaranteed approval” claims
FAQs
How fast can I get the money?
Some lenders fund same day. Others take 1–2 weeks.
Are home improvement loans tax-deductible?
Sometimes, if secured and used for qualifying improvements.
Do I need contractor estimates?
Usually not for personal loans.
Conclusion
Understanding how to get a home improvement loan starts with knowing your credit score, project cost, and loan options. Whether you use a personal loan, HELOC, or home equity loan, comparing lenders helps lower costs and avoid unnecessary debt. Smart planning turns home improvement into long-term value, not financial stress.
