Best Home Improvement Loan Rates
Point of Interest: Home Improvement Loans
A home renovation loan could be perfect for someone comfortable taking on debt to pay for an update or an upgrade to their home. You often have to pay higher interest on these loans, so it’s essential to consider all options and remember that the best home improvement loans give you a low APR and flexible terms that work with your timeline.
Whether your home renovation project is new siding or a huge addition, there are tons of lenders out there who can help you finance it quickly and easily. The number of lenders can make it difficult to choose the right one for you, though. How can you decide between the large bank and the local credit union? That may seem like a monumental task, but with a little research, it’s possible. The best home improvement loans offer low interest rates, flexible repayment terms and a simple financing process. If you want to find the right fit for you, it’s important to do your research and look at each lender, along with the features they offer, to determine whether they meet your needs.
8 Best Home Improvement Loan Rates of 2020
- Sofi – Best for large projects
- Discover – Best for small projects
- LightStream – Best for large projects
- Earnest – Best for fast repayment
- Marcus by Goldman Sachs – Best for small projects
- Best Egg – Best for small projects
- Wells Fargo – Best for flexible terms
- Upstart – Best for lower credit scores
|Lender||Estimated APR||Maximum Loan Amount||Loan Term|
|Marcus by Goldman Sachs||6.99%-28.99%||$40,000||36-72 months|
|Best Egg||5.99%-29.99%||$35,000||36-60 months|
|Wells Fargo||5.24%-20.24%||$100,000||12-84 months|
What is a home improvement loan?
A home improvement loan is an unsecured personal loan borrowed from a lender. There is a higher risk for the lender, which means the APR is often higher than it is with other types of loan options. Still, home improvement can be a good option for funding home improvement projects because of the flexibility. Once you receive the financing, you can use it for anything from a kitchen renovation to a new garage.
Loan requirements vary by lender based on the term length, the estimated APRs and the credit scores you need to qualify.
Home improvement loan vs. home equity lines of credit (HELOCs)
A home equity line of credit (HELOC) is a loan taken out against the equity of your house with your home used as collateral. If you default, you could lose your home. However, a HELOC acts more like a credit card than a lump sum loan. You can draw from a HELOC multiple times during the draw period and paying it back will replenish the credit line, so it’s a good fit for people who aren’t sure about the full cost of the renovation project. HELOCs typically offer lower interest rates and more extended repayment periods than home improvement loans, which may make it the right option for you, provided you have enough equity built up in your home to make it work.
Home improvement loan vs. cash-out refinancing
A cash-out refinance is a method of obtaining cash in hand after refinancing your mortgage. If you have equity in your home, you can refinance your current mortgage for an amount that’s more than you owe and you’ll receive the excess amount in cash. You can use this money to pay for home improvements. It’s possible to get a lower interest rate through this method, but you also must be able to pay it back or you risk foreclosure, as your house is used as collateral.
Home improvement loan vs. 0% interest credit cards
If you have a high FICO score, you could consider putting your small home renovation bill on a new 0% interest credit card. Some credit cards offer a no-interest period of up to 18 months, so if you’re sure you can pay back the project in that period, you could save on interest by putting the expenses on this type of credit card. The risk is that you may end up with an even higher APR than you would have with a personal loan after the introductory period is over.
8 best home improvement loan rates of 2020
Sofi – Best for large projects
Sofi is a financial technology lender with over 900,000 members. The company is unique in that it offers its customers financial planning, networking events, and career coaching. You can receive up to $100,000 for a home improvement loan if you qualify, so it’s an excellent choice for people who have more significant renovations in mind for their home. However, it can take up to a week to receive the money, so it’s a bit slower than some other options.
Discover – Best for small projects
Discover is a well-known financial institution that funded over $90 billion in direct loans during 2018. It has no origination fees and offers repayment terms of up to 84 months. The company only offers up to $35,000 for a home renovation loan, so it’s best for smaller improvement projects. You can get same-day approval, though, and the company has a fully U.S.-based customer service team.
LightStream – Best for large projects
LightStream is the online lending division of SunTrust Bank that offers loans for almost anything you can imagine, and it has some of the lowest rates, even on loans with 12-year terms. The APR maxes out at 14.99%, which is almost half of what some of the other lenders offer, and you can borrow up to $100,000 for each loan, so it’s great for an extensive renovation.
Earnest – Best for fast repayment
Earnest is a financial technology company that offers personal and student loans. The longest term the company offers is 60 months on its loans, but you’ll get the best APR with the shortest 36-month term. This option could be perfect for someone who can pay off their loan within the designated five years or less.
Marcus by Goldman Sachs – Best for small projects
Marcus is the online offshoot of banking behemoth Goldman Sachs and recently received the top spot in customer satisfaction by J.D. Power. The most you can borrow from Marcus is $40,000, so this loan would be best if you need to cover smaller renovations. The interest is on the higher end as well, but if you can repay early, Marcus won’t charge a prepayment fee.
Best Egg – Best for small projects
Best Egg is an online lending partner that targets high-income earners who are looking for cash for goals like home improvements. With Best Egg, you’ll need a credit score of at least 640 to qualify for a personal loan. If you are eligible, a Best Egg loan is excellent for smaller home updates because the maximum amount you can take out is $35,000.
Wells Fargo – Best for flexible loan terms
Wells Fargo provides an array of banking and credit services to its over 70 million customers and personal loans for home improvements are one of the options. This bank offers one of the lowest potential APRs at 5.24% and its loan terms can be as short as 12 months or as long as 84 months. This option gives customers more choices when it comes to paying back loans.
Upstart – Best for lower credit
If you’re still working on building up your credit, take a look at the online lender Upstart. The minimum credit score to qualify in most states is 580, which is lower than many other home improvement loan options, but if your credit score is low it will likely bring a higher APR. You can get approved quickly and receive funds within one business day.