2020 Best Home Improvement Loans

Home improvement loans are unsecured, meaning they’re approved based on the borrower’s credit history and income and do not require collateral. They are offered by online lenders, banks, or credit unions and work similarly to personal loans. Once approved, you’ll receive funding through direct deposit or paper check, and then be able to pay for your building supplies and contractors. Let’s take a look at the top home improvement loan providers and examine whether one is right for you.

Best Home Improvement Loans of 2020

Best Overall: SoFi


Sofi is among the most user friendly lenders available because everything can be done from the convenience of your home via their website. You can use the project cost estimator to determine how much you might need to finish your home renovation, and you can learn what your rate will be in less than two minutes.

SoFi offers fixed payments, low interest rates and no hidden fees on home improvement loans. They’re a good option for borrowers who have a great credit score, but it can take SoFi as long as a week to fund the loan, which places them at a disadvantage when compared to some of the other lenders.

SoFi Disclosure

Best for Quick Approvals: Earnest

Earnest has a unique way of screening candidates. They weigh the expected benchmarks, like your credit history and income, but they also take into account your spending habits, education and your career to determine eligibility.

If you’re approved for a loan, Earnest can fund it in about two business days, which gives them an advantage over SoFi, which takes much longer to release the funds for your project. Earnest also has live agents available around the clock, which you can reach by either phone or email.

The only disadvantage to Earnest is that they require you to give them access to your checking account to determine your spending and saving habits. This might dissuade some borrowers from using Earnest, especially considering that other lenders don’t require this step.

Best No-Fee Lending: Marcus

Marcus offers an easy application process online, and you can see the rate you qualify for in about five minutes without impacting your credit score. But that’s not the only advantage to Marcus; they also offer competitive rates starting from 6.99% APR, and are a good option if you have excellent credit.

Still, there are several other factors to consider. The first is that Marcus caps home improvement loans at $40,000, so if you need more to fund an extensive project, Marcus may not be the right lender for you. It can also take Marcus five business days to fund your loan, which means you’re in for a longer wait than you will be with lenders like Earnest.

Rate Disclosure – For New York residents, rates range from 6.99% to 24.99% APR. Rates will vary based on many factors, such as your creditworthiness (for example, credit score and credit history) and the length of your loan (for example, rates for 36 month loans are generally lower than rates for 72 month loans). The available loan term may vary based on your creditworthiness (for example, 72-month loan terms will not be available to all applicants). Your maximum loan amount may vary depending on your loan purpose, income and creditworthiness. Your income must support your ability to repay your loan. Your monthly payment amount will vary based on your loan amount, APR and loan term. For example, a $402 monthly payment is based on a $15,000 loan with a 12.99% APR and 48 monthly payments.

Best Traditional Bank Lending: LightStream


Lightstream delivers competitive terms on home improvement loans that are hard to pass up. With interest rates starting as low as 4.99% APR and borrowing limits up to $100,000, this is a great option for home projects of all sizes.

There is a catch, however. Unlike other lenders like SoFi or Marcus, LightStream does not offer pre-qualification. This can be problematic if you want to see what your interest rate will be, but don’t want the hard pull to show up on your credit history. That aside, if you have an established credit history, it’s hard to pass up the competitive and flexible terms LightStream offers.

LightStream Disclosure

Best Peer-to-Peer Lending: LendingClub

LendingClub is a peer-to-peer lender, which means that you aren’t borrowing money from a big bank or lender when you go through them. Once you apply and receive approval, individual investors will be the ones who fund your loan.

The process is simple. You’ll apply online like you would with any other loan, and LendingClub assigns you a grade, which corresponds to the interest rate you’ll receive on your loan.
LendingClub should be considered if you have good but not perfect credit, as the lending guidelines are more flexible. As an added bonus, LendingClub is one of the lenders that allow you to have a cosigner for the loan, should you need one.

The main drawback of LendingClub is the fees. They have a loan origination fee between 1% and 6% of your loan amount, and they determine the fee based on creditworthiness. As you can imagine, this may become an expensive option if your credit is less than stellar, especially if you need the funds for a larger project.

LendingClub Disclosure

Best Loans for Average Credit: Avant


Avant has one huge advantage over other home improvement lenders: they can often fund your loan the day after you’re approved if you opt for direct deposit. They also allow you to check your interest rate without impacting your credit score.

That said, Avant loans come with pretty high interest rates. Their opening rate of 9.95% APR isn’t stellar, considering that other lenders like LightStream offer interest rates starting at 4.99% APR.

Avant does offer some convenient options, such as quicker funding and flexible repayment options, but you may well be paying for those perks with their higher interest rates.

Avant Disclosure

Best Loans for Credit Checks: Prosper


Prosper is similar to other lenders in that you can check your interest rate with no ding to your credit score and you can receive your funding quickly. With interest rates starting at 6.95% APR, this lender is smack dab in the middle on affordability.

Some of that affordability is negated, though, by Prosper’s loan origination fee. This lender charges a fee based on your credit profile, which could cost you anywhere from a few hundred to a few thousand dollars depending on your credit score and how much you need to borrow. Other lenders offer lower interest rates and don’t charge loan origination fees, so make sure you weigh all the factors if you decide to go with Prosper for your loan.

Prosper Disclosure

The Best Home Improvement Loans: Summed Up

Lender Best APR Term Minimum Maximum
SoFi 5.99% APR 2 to 7 years $5,000 $100,000
Earnest 5.99% APR 3 to 5 years $5,000 $75,000
Marcus 6.99% APR 3 to 6 years $3,500 $40,000
LightStream 4.99% APR 2-12 years $5,000 $100,000
LendingClub 6.46% APR 3 to 5 years $1,000 $40,000
Avant 9.95% APR 2-12 years $5,000 $100,000
Prosper 6.95% APR 3-5 years $2,000 $40,000

When Should I Get a Home Improvement Loan?

The best time to apply for a home improvement loan is when you have a large renovation project you want to tackle. That could be adding another bathroom to your home, roofing your house or installing a pool, or any other major home-related project. This type of loan is a good option if you don’t have a lot of equity in your home to draw from but need or want to make home improvements.

Check Your Personal Loan Rates

Answer a few questions to see which personal loans you pre-qualify for. The process is quick and easy, and it will not impact your credit score.

Before applying, be sure to check your credit history for inaccuracies, and if you find any, dispute them. You’ll want to make sure your credit is in tip top shape so you can get the best rate from lenders. If your credit score is subprime, consider a bad credit loan instead. It’s also important to get a few estimates prior to applying for a loan so you have an idea of how much money you need to get the job done.

The Bottom Line

Whether you want to give your kitchen a fresh look, build the deck you’ve wanted, or want to make a few bigger home repairs, one of the decisions you’ll face is how to pay for your home improvement. Sure, you could use your credit cards or maybe take advantage of in-store financing, but one of the most convenient ways to pay for larger projects is with a home improvement loan.

If you’re considering this type of loan, you’ll want to examine which fees they charge. Origination fees can add hundreds of dollars to your loan amount, and there’s no reason to pay them if you don’t have to, especially considering that some lenders, like Marcus and LightStream, don’t charge these fees.

If you want or need to make home renovations and want a convenient way to fund your project, a home improvement loan is one of the better options to explore.

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