Best Home Improvement Loans for 2021
So you’ve finally outgrown your dream home. Perhaps the kids are no longer fans of sharing a room. Maybe you just need more office space or a designer kitchen. Instead of buying a whole new place, why not give some love to your current one? For a modest monthly fee, you can make improvements that’ll pay for themselves in time, and you don’t have to wait for years to save up the money. We’ve done all the hard work and found the best home improvement loans on the market. All you have to do is take your pick and make the call.
4 Best Home Improvement Financing Options
LightStream offers fantastic loan solutions for just about any purpose, including house improvements. The company’s main advantages are low rates (further discountable by using AutoPay), no fees, and flexible terms that can range anywhere between 24 and 144 months. Read Review
- •Some of the lowest rates in the industry
- •No fees
- •Fast approval times and funding
Avant is a great option for people with fair credit scores, accepting scores as low as 580. The minimal loan amount is also low, but APR tends to be pretty high, and there are lots of additional fees. Read Review
- •Low minimum loan amount
- •Supports customers with fair credit scores
- •Soft credit pull
SoFi offers some of the best personal loans for home improvement, but there are pretty strict credit score requirements. In addition to having competitive rates, the company sweetens the deal by charging absolutely no processing fees and conducting soft credit pulls when processing your application. Read Review
- •Competitive rates with AutoPay discount
- •No origination, prepayment, or late payment fees
- •Allows users to change payment due date
Upstart is an AI-powered peer-to-peer lending platform that offers competitive rates for house renovation loans while requiring only a modest credit score from its borrowers. The company offers high loan caps with extremely quick funding and no prepayment penalties. Read Review
- •High loan amounts and fast funding
- •No prepayment fees
- •Reports payments to three credit bureaus
How We Evaluate Home Improvement Loans - Our Review Methodology
Picking a loan for home improvement can seem like a daunting task to people who are new to loan financing. The market is flooded with offers, and if you don’t know what to look for, it’s hard to make the right choice. That’s why we’ve created a methodology to help us objectively evaluate the best loans for home improvement. To better understand the relevant terminology, check out our guide to home improvement financing terms.
There are a few things you need to consider before you can even start thinking about home improvement loan options. The most important question is: what am I going to need in order to qualify for a loan? This section examines the requirements that companies have when determining loan eligibility and terms. The most important thing here is your credit score. What is the minimum credit requirement to qualify for a loan? Will terms be affected by your credit rating, and if so how much do you need to get the best home improvement loan rates?
While essential, your credit rating isn’t the only factor that companies assess. Your loan history appears on your full credit report but not details about your job or education. How long have you worked at your current company? Do you have a college degree? What did you pay in taxes last year? Do you plan to live in the house after you fix it up, or are you preparing to sell it? The answers to all these questions don’t only determine whether you get a loan but what sort of terms that loan comes with.
Finding the best place to get home improvement loans comes down to finding the most favorable terms and conditions. So, what exactly does that mean in practice? First off, you need to work out how much money you want to borrow and consider the financing limits of your potential lender. You also need to consider the type of home renovation loan you want; for the most part, companies offer personal unsecured loans for home improvements, and this is what our reviews focus on.
This category also considers other essential factors such as loan processing times, repayment terms, and any potential hidden or bonus costs that aren’t immediately obvious. All of these factors tie into our next category.
Everyone loves low interest home improvement loans, but things get complicated when you have to figure out how much your loan will actually cost you. This category examines all the costs and fees that you’ll have to pay during the course of your loan. The basic interest rate is an obvious example, but the real cost will be much better represented by your annual percentage rate or APR. You also need to take note of extra costs that may come attached to your home improvement loan, such as origination, cancellation, and late payment fees.
The final thing to consider when searching for the best renovation loan on the market is how much effort the company behind it puts into forging good customer relationships. Companies with a good reputation give you peace of mind, but those that deliver the information you need in a timely fashion are even more remarkable. This category considers both the company’s public image and available customer support avenues. We look at both their Better Business Bureau rating and online customer reviews while evaluating the ways in which the company provides customer support and technical assistance.
LightStream is the online lending branch of the massive Truist Financial Corporation, a conglomerate that includes over ten advisory, banking, and investment-related companies. The vendor offers some of the lowest home improvement loan rates on the market with terms ranging from two to 12 years.
There are numerous other perks, such as flexible payout times and rate discounts through automatic payments. That said, you’ll need several years of good credit history in order to qualify for an unsecured home improvement loan.
In order to apply for home improvement loans, you’ll need to give your personal and employment details as well as any current monthly housing payments such as your mortgage or rent.
One disadvantage to LightStream is that you can’t prequalify for an unsecured personal loan. You’ll also need to have proof of good credit history and a credit rating of at least 660 to be eligible for a renovation loan. Considering that the company does a hard credit pull, you should make sure you meet the requirements before applying in order to avoid pointlessly lowering your credit score.
LightStream offers some of the best home renovation loans on the market. But the minimal amount you can apply for is $5,000, so it’s not an ideal option for microloans. The maximum you can get is $100,000. Loan terms range from two to seven years.
Once approved, you can either opt for immediate financing or set a date to receive the money within one month from approval. Bear in mind that once you’ve set up your payment date, you won’t be able to change it. Payments are handled on a monthly basis, and setting up auto payments instead of invoicing gives you a 0.50% discount.
As with some of the other best home improvement loan options on the market, LightStream is very transparent about its costs. Your exact APR depends on multiple factors including the loan amount, term length, and your credit profile. For example, the lowest estimated APR is 3.99% for a two or three-year loan in the $10,000 - $24,000 range. The highest APR is around 16.99%.
In addition to the already low rates, a LightStream home improvement loan comes with no fees, including origination and pre-payment/late payment fees. To further sweeten the deal and ensure you’re getting the best interest rates on home improvement loans, the company offers a Rate Beat program.
If you can prove that you’ve been approved for a fixed-rate unsecured loan for home improvements with the exact same details as the one you’re applying for at LightStream, you’ll get a discount of one-tenth of a percentage point.
LightStream is widely respected within the industry. They have a stellar A+ rating on BBB, and their online customer reviews are mostly positive. However, their customer support options aren’t the best - you can only contact the support staff through the web portal from Monday to Friday between 9 a.m. and 8 p.m. on weekdays and from noon to 4 p.m. on Saturdays.
Reasons to Apply:
- Some of the best loan rates in the industry
- No fees
- Fast approval times and funding
Avant offers some of the best home improvement loans for people who don’t have a stellar credit rating but need quick approvals for small loans. This Washington-based company started out in 2012 as AvantCredit, a venture designed to improve borrowing options for middle-class consumers.
Through a partnership with WebBank, Avant offers small-to-medium loans that are quickly approved for people with fair credit ratings. Although not the cheapest option on the market, the quick processing times, soft credit pulls, and low credit requirements make the company a popular choice.
The nice thing about Avant is that they don’t punish potential customers when applying for a home remodeling loan. While many top home improvement financing companies perform a hard credit check, which hurts your credit rating even if your loan is denied, Avant only does a soft pull.
Speaking of credit scores, the company claims that it will accept people with scores as low as 580. Better ratings will predictably get you better rates but not to the extent that it would match LightStream’s offer.
In terms of information, you’ll need to provide your name, address, date of birth, and Social Security number, as well as tax returns for the past two years if you’re self-employed.
While perhaps not the best home improvement loans for bad credit, Avant still has a decent offer for applicants with fair credit. The minimum you can borrow is $2,000, while the maximum is $35,000, making it a good fit for smaller repairs but not ideal for huge renovation projects.
Loans can be taken out for a minimum of 24 and a maximum of 60 months and are typically funded through ACH transfers within one business day. You can even get a refinancing loan or ask for a lower rate after you’ve been with Avant for six months or longer.
One downside to having few requirements is that Avant won’t give you the best rate for a home improvement loan project. APR varies from 9.95% to 35.99%, with fair credit holders typically looking at rates higher than 25%.
In addition to a fairly high APR, customers getting home renovation loans will also have to deal with numerous processing fees. The administration fee goes up to 4.75% of the loan amount, while a dishonored payment fee will set you back $15. Late payment fees vary from state to state but are typically around $25.
The company may not have the best rates for home improvement loans, but Avant enjoys a solid A rating on BBB, alongside generally favorable online customer reviews. That’s partly due to their low lending requirements, quick payouts, and refinancing options.
Another reason is their excellent customer support team. You can reach them through email or by phone from Monday through Friday between 7:00 a.m. and 10:00 p.m. CT. You can even catch them on the weekends between 7:00 a.m. and 8:00 p.m.
Reasons to Apply:
- Low minimum loan amount
- Supports customers with fair credit scores
- Soft credit pull
Social Finance, or SoFi for short, is one of the best home improvement financing solutions on the market. This San Francisco-based personal finance company focuses on student loan refinancing, credit card consolidation, mortgages, and personal loans. Since 2011, it financed more than $50 billion in loans.
The company offers loans for home improvement with great rates and terms ranging from two to seven years. There are also numerous benefits such as soft credit pull inquiries and no origination, prepayment, or late payment fees. The one downside is that you need a fairly good credit rating in order to apply for a low interest loan.
To be eligible for the best loan for home improvement, you’ll need a credit score of at least 670, though 680 or higher is recommended. But since there are no processing fees and the company does a soft credit check, there’s no reason not to try even if your credit score is slightly lower.
In order to apply for a SoFi home improvement loan, you’ll need to provide your name, address, contact details, and your Social Security number. Unfortunately, processing times are fairly lengthy, and some applicants may wait for up to a month to get the money after their loan is approved.
SoFi provides a solid range of options when it comes to loan terms and amounts. You’ll be able to pick the best loan for home improvements that fits your monthly budget; terms range from 24 to 84 months, and amounts can be as low as $5,000 and as high as $100,000.
In addition to being able to change your monthly payment due date (a feature most competitors don’t allow), you can also apply for unemployment protection - forbearance in case of an unexpected job loss that wasn’t your fault. This will suspend your loan payments for three months at a time and up to a maximum of one year, but you’ll have to work with SoFi’s team to find employment during that time.
If you hate fees, SoFi is the best place to get a home improvement loan. The company prides itself on not only waiving processing fees but also prepayment and late payment fees.
In terms of APR, SoFi isn’t quite as good as LightStream but still offers some of the most competitive rates on the market, ranging from 5.99% to 18.28%. As with LightStream, you get a slight discount when using automatic payments instead of invoicing.
In addition to offering some of the best home improvement loans on the market, SoFi works hard to preserve an excellent reputation among its customers. The company has an excellent A rating on its Better Business Bureau profile and mostly positive customer reviews on sites such as Trustpilot.
In terms of customer support options, you can get in touch with the staff by phone, email, or live chat, and there’s even an option to reach out to them on Twitter. The working hours are Monday to Thursday between 5 a.m. and 7 p.m. and Friday to Sunday between 5 a.m. to 5 p.m. Pacific Time.
Reasons to Apply:
- Competitive rates with AutoPay discount
- No origination, prepayment, or late payment fees
- Allows users to change payment due date
Upstart is an AI-powered peer-to-peer lending platform. The marketplace also uses alternative data gathering methods, which allows fair credit borrowers to get the best possible rates for home improvement loans through a network of investors willing to finance unsecured personal loans.
The California-based company started operating in 2012 and has since developed a sophisticated AI-assisted income and default prediction model, which in addition to one’s credit rating also considers factors such as colleges attended, area of study, GPA, and standardized test scores.
In order to apply for a loan, you’ll need to provide slightly different details than what you’re used to. Of course, your credit score is still going to get examined, and in order to get the best home improvement loans and rates, you’ll need higher scores. But even a score of around 630 should be sufficient.
In addition to your name, address, phone number, occupation, salary, and other personal information, the company will also be interested in the borrower’s level of education, which the prediction models factor into their calculations. You’ll have to provide detailed information about your academic record in addition to the more standard personal and employment details.
On the plus side, the company performs soft credit pulls, so even if your application is denied your credit rating won’t be affected.
When thinking about the best loan to get for home improvement purposes, it always pays to have options. Upstart offers terms ranging from 36 to 70 months, and you can even pay them off early without extra fees.
As for the loan amounts, the lowest you can borrow is $1,000, which is perfect for those with small scale repairs or borrowers who just need to boost their renovation budget. The maximum you can get is a hefty $50,000.
The nice thing about getting a personal loan for home improvement from Upstart is that it’s quick. The company not only provides next day funding for most home remodeling loans but also reports credit repayments to all three major credit bureaus, giving your credit a solid boost.
Even the best loan for home improvement without equity will typically have higher rates than those that come with some collateral. That said, Upstart offers a pretty competitive APR ranging from 7.98% to 35.99% depending on your circumstances.
While there is no prepayment fee, you will most likely have to pay an origination fee, which can go up to 8% but also be waived under some circumstances. There is also a late payment fee of $15.
If you were to pick the best option for home improvement loans based on reputation alone, Upstart is a top choice. With a 4.9 out of 5 from over 6,000 online reviews on TrustPilot and a solid A+ on their Better Business Bureau profile, it’s the most popular company on our list.
In terms of customer support, you can check out a very detailed FAQ section on the company’s website or get in touch with knowable agents by phone or via email from 6:00 a.m. to 5:00 p.m. Pacific Standard Time, every day of the week.
Reasons to Apply:
- High loan amounts and fast funding
- No prepayment fees
- Reports payments to three credit bureaus
A Short Guide to Loan Vocabulary
While searching for the best loan for home renovation, you’ll come across many legal terms that you may not necessarily be familiar with. In order to help you decipher some of the most common terms, we’ve compiled a short list with definitions.
APR: Known as the annual percentage rate, this is the true cost of your loan per year. It represents the sum of all interest charges which accumulate during the year, including all potential fees. The annual percentage rate can be fixed or variable, with the former always being a safer option for keeping your costs in check.
Interest Rate: 0% home improvement loans are the proverbial unicorns of the lending market. Interest rates are the basis of most loan arrangements and are very similar to APR. They represent the amount a lender charges for the use of assets and are expressed as a percentage of the principal lending amount. You may view them as the net cost of your loan, with origination and other fees contributing to the gross cost that is your APR.
Application Fee: This is a fee some companies charge just to process your application. It doesn’t guarantee that you’ll get the loan, and you may end up wasting your money for nothing. But these fees are very high, ranging between $20 and $50. The best lenders for home improvement loans typically waive this fee, but if that’s not the case you should make sure that you qualify for the loan before applying for it.
Origination Fee: This is the most common type of fee on personal loans and is charged when the loan is approved and money is sent to your account. Sometimes referred to as administration fees, these are typically charged as a percentage of the amount that you borrow.
Prepayment Fee: A fee charged when you want to pay off your loan early. This usually works against the lender because there is less money to be made from the interest over time. To minimize their projected losses, lenders charge you an extra fee, typically worth between 2% and 5% of the loan amount.
Late and Returned Payment Fees: If you want the best rates on home improvement loans, make sure to pay them off on time. Late payment fees are charged when you don’t pay on time, while returned or dishonored payment fees are charged when you try to make a payment but don’t have the funds to do so.
Loan Term: This one refers to the amount of time that your loan will take to get repaid. Personal loans typically have much shorter terms than mortgage or equity loans, and the length of a loan is often a key factor in determining its interest rate and other related fees.
How do home improvement loans work?
Generally speaking, home improvement loans are commonly associated with unsecured personal loans that cover the costs of home upgrades. There are also home equity loans or home equity lines of credit. All of them share one key characteristic; if you qualify for the loan, the lender will let you borrow funds towards repairing or upgrading something in your house, and in return, you’ll repay them the money with interest through fixed monthly installments.
What type of loan works best for financing home improvements?
When trying to figure out the best way to finance home improvements, you need to consider multiple factors. First, decide how much money you’ll need and what your credit score is. Both of these can play a role in limiting your home improvement financing options.
When is a home improvement loan a good idea?
A property improvement loan is always a great idea if it improves the value of your home and makes your home safer or compliant with local or regional laws. You need to work out how much money you need, how urgent the work is, and whether your monthly budget can handle the additional strain of loan repayments.
What credit score is needed for a home improvement loan?
In order to qualify for the best home improvement loans, you’ll need a good credit score. That said, there are plenty of companies that you can turn to for decent home improvement loans even with a bad credit rating. The minimum credit score for a home improvement loan with most companies is around 600 or better.