Best Home Improvement Loans of March 2020

How Does a Home Improvement Loan Work?

With a personal loan for home improvements, you’re borrowing unsecured money to pay for upgrades to your house, and you don’t usually have to use your home as collateral. There are some situations where you might have to secure a personal loan with your home, but, for the most part, you can use the money to make renovations without putting your house at risk.

And because it’s a personal loan, it’s possible to use the money for just about anything you want. So, if you still have money left after you complete your home renovation projects, you can use it for other costs, such as consolidating debt or buying new furniture. However, it might make the most sense to put the leftover money toward paying down your loan faster.

When Does Using a Personal Loan for Home Improvements Make Sense?

If you have a small amount of equity in your home and you don’t want to put your home at risk, a personal loan might be your best bet—even though you might have to pay a little more in interest. Plus, a personal loan can be used for just about anything. So if you’re looking to renovate your kitchen and purchase all new furniture for your patio, you can do both with your personal loan.


Many of the alternatives to an unsecured personal loan require you to have equity in your home. Additionally, you secure these loans with your home, so if the unexpected happens and you aren’t able to make payments, you could lose your house. These other loans include home equity lines of credit (HELOCs), home equity loans, and cash-out refinancing options, and can be used for home improvements.

Another option may be credit cards with promotional financing. If you’re able to sign up for a credit card with a flexible credit limit and a low introductory APR, you may be able to pay for your home improvements while saving on fees and interest. For example, a credit card may have a promotional offer with 0% APR for the first 15 months, plus no annual fee. That means you can put renovation costs on the card and pay them off over those 15 months without accruing interest charges. Just keep in mind that you may not have a high enough credit limit to pay for many renovations, and after the promotional period expires, you’ll start racking up interest. Average credit card interest rates generally top 20.00%.

A personal loan will almost always come with an APR, and some have origination fees—those can eat into your loan amount and add to the interest that you pay over time.

Pros & Cons of Home Improvement Loans


  • Unsecured

  • Low- and no-fee loans available

  • Equity isn’t required

  • Options for those with fair or poor credit

What We Don’t Like

  • Might pay higher APRs

  • Limits to the amount you can borrow

  • Can’t borrow repeatedly against your equity like you would with a HELOC

How Should I Choose a Personal Loan for Home Improvements?

When comparing the best home improvement loans, consider your needs and financial situation. Look at how much you’ll pay overall for the loan, including interest rates and fees. In many cases, it’ll make the most sense to go with the lowest-cost loan.

However, you also need to pay attention to your practical needs. If you need more than $35,000 or $40,000 for your home improvements, you might want to look at lenders like LightStream or SoFi. On the other hand, if you have small improvements, lenders with low minimums of $2,000 or $3,500, like Marcus or Avant, might work better.

You’ll have to find a lender that will approve you based on your credit score. If you have poor credit, you might need to choose a lender with a higher APR because it may give you a loan when other lenders won’t. But, while securing a new loan may ding your credit, paying it back on time and in full can help you build a better credit history and score. 

How We Chose the Best Home Improvement Loans 

Our writers spent hours researching loan options from over 50 lenders, looking at loan amounts, interest rates, fees, repayment terms, and more to determine which loans are likely to meet various needs. Loan recommendations take into account the needs and situations of various borrowers. One home improvement loan may not be right for every borrower, so consider all of your options before applying and securing your next personal loan.

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