Best Home Improvement Loans to Tackle That 2021 Renovation

Statistically speaking, the biggest investment of most Americans is their home. And if you’re one of them, you know just how important it is to maintain and upkeep that investment. Enter best home improvement loans.

In essence, borrowing to invest in your home’s value is what economists call “good” debt. In other words, it’s going to be money well spent. 

And to help you on your quest, we put together this comprehensive list.

Here, you’ll find our top picks ranked on factors such as:

• APR range
• minimum credit score
• loan amount range

Let’s get started!

Affiliate Disclosure

Overview — LightStream is the online service of Truist Bank, the “superbank” formed when BB&T joined forces with SunTrust. It has an exceptional reputation, as does its parent company, for providing both great service and favorable terms. 

The LightStream home improvement loan is our overall top pick, whether you’re just looking to make a small addition or working on larger projects. 

Whole-project funding — With a loan limit of $100,000, LightStream’s home improvement loans are flexible enough for most projects. And although you can qualify for up to 12 years to repay the loan, there are no prepayment penalties. 

Same-day funding — If you need to make emergency repairs, LightStream is an excellent option. You can get funds deposited to your account the same day you apply if need be. 

Rate Beat Program — LightStream is so confident that it has the best home improvement loan rates, it will offer you a lower rate than any competing lender. If another lender approves the same terms at a lower rate than LightStream, the company will beat the competitor’s rate by .10 percentage points. 

#1 in customer satisfaction — J.D. Power ranked LightStream first place for customer satisfaction in the personal loans category in its 2020 US Consumer Lending Satisfaction Study.

Pros:

• Outstanding loan amount range 
• Superb rates and rate-matching
• No fees
• No equity requirement
• Same-day funding

Cons:

• Requires relatively good credit
• Best rates only for small loans

Overview — SoFi is something of an elite club. It offers a lot of great loan options and wants to help borrowers achieve financial goals responsibly. 

But, it’s not for everyone. 

SoFi has relatively high credit score requirements, to begin with. But, it will also look at your cash flow, income after expenses, and other factors to determine your creditworthiness.  

Wide range of payment options — In addition to having some of the most flexible payment options on this list, a SoFi home improvement loan allows borrowers to change the payment due dates once a year on fixed-rate loans.

Zero fees — Another great advantage of SoFi is that you won’t have to calculate additional fees for your home improvement project. SoFi’s loans include no origination fee, no late fees, and there are no prepayment fees if you want to pay off your loan early. 

Unemployment protection program — SoFi will work with borrowers who lose their jobs to offer forbearance on loan payments. It’s capped at 12 months over the life of the loan and the loan will continue to accrue interest over the period, but you can choose to continue to make interest-only payments. 

Pros:

• Pre-qualification with soft credit pull
• Unemployment protection
• Allows changes to payment due date
• No origination or prepayment fees
• Allows joint applications

Cons:

• High credit score requirement
• The average approval time is seven days

Overview — Avant is a fintech company that markets its services primarily to middle-class borrowers. To that end, it has relatively lax credit scores that may appeal to subprime borrowers. 

Avant doesn’t disclose requirements and states that most Avant customers who receive loans are in the 600–700 range. However, numerous sources have found that Avant considers scores as low as 580. So it’s a superb source of bad credit home improvement loans. 

But, if you have a higher credit score, there’s a good chance you can get a more favorable loan somewhere else.

Credit-builder loans — Seeing how it caters to subprime borrowers, Avant can also double as a credit repair resource. Avant doesn’t charge prepayment penalties, so you can use its loan to help build positive credit history and avoid long-term interest buildup. 

Fast funding — Avant can fund loans as quickly as the next business day after approval. However, loans take a few days to approve.

Fees — Avant charges late fees so even if you qualify for the best rate for a home improvement loan, you still might pay more than with another lender.

What’s more, Avant is anything but lenient when it comes to fees. Loans incur a 4.75% “administrative fee” that the company keeps before it funds your loan.

Pros:

• Low credit score requirement
• COVID-19 assistance program
• Soft credit inquiry for pre-approval
• No prepayment fees
• Quick funding

Cons:

• 4.75% administrative fee
• The maximum amount is $35,000

Overview — Upstart is a unique type of lending platform whose goal is to move away from credit score as the primary determiner of creditworthiness. Instead, Upstart takes into account things like education, job history, bankruptcies, and other such factors. 

While that creates a great opportunity to get home improvement loans with bad credit, it does come at a cost. Upstart loans generate origination fees of up to 8% of the loan amount. 

Accepts applicants without FICO score — You can apply for a loan from Upstart even if you don’t have enough credit history to generate a FICO score. 

Lower average APR rates — According to data from Upstart, its proprietary underwriting model provides home improvement loan interest rates up to 16% lower than traditional models. However, that’s from a hypothetical data set and may not be true for you. 

Allows concurrent loans — You can apply for a second loan from Upstart even if you already have a loan. The option is available if you make timely payments on your first loan and have no more than $50,000 of outstanding principal when the second loan is approved.  

Small project loans — You can apply for loans as small as $1,000 from Upstart. That and an absence of prepayment fees make Upstart the best way to get a home improvement loan for small repairs around the house.

Pros:

• Allows applications without FICO score
• May have lower rates than traditional lenders
• Soft credit inquiry
• Loans as small as $1,000
• Well-designed and intuitive mobile app

Cons:

• Origination fees of up to 8%
• Only two repayment terms

Overview — While Upgrade stands out most for its debt consolidation incentives, it’s also an excellent choice for personal loans of all kinds. It has a wide range of options that make it quite appealing for most home improvement projects. 

However, it has a few drawbacks as well. For instance, borrowers with excellent credit scores could potentially find better rates with a standard loan.

Best for fair credit scores — Upgrade doesn’t disclose a minimum credit score for applicants, but third-party sources place it at around 620. Nevertheless, that probably won’t qualify you for the best rates for home improvement loans. A score closer to 680 is recommended for a reasonable rate with Upgrade. 

Co-signed loans — Another option to qualify for better rates or a higher amount is with a joint application. When you apply with a co-signer, Upgrade uses both credit scores to determine eligibility for APR rates and amounts.

Flexible payment date — Upgrade allows borrowers to change their payment date if necessary, to account for income fluctuations.

COVID-19 assistance program — Upgrade borrowers who suffer hardship as a result of the COVID-19 pandemic have access to options that can help them manage their debt. 

Upgrade’s most striking drawback is a hefty origination fee of 2.9%–8% of the loan’s total amount.    

Pros:

• Low-interest loans for joint applicants
• COVID-19 assistance program
• Substantial autopay rate discounts
• No prepayment fees
• Accessible to borrowers with bad credit

Cons:

• High origination fee
• Charges late fees

Overview — If your credit is in the Fair range (630–719), Best Egg is likely to be your best option for a home improvement loan. There’s also a good chance Best Egg will provide better rates than credit cards or a home equity line of credit. 

Quick application — Even among today’s new breed of online lenders, Best Egg’s process is highly streamlined. You can complete the online applications in a few minutes and can receive funding in as little as one business day after approval. 

Nested Loan — Best Egg offers a unique kind of secured loan that’s designed specifically to provide homeowners with the best rate for a home improvement loan. This Nested Loan is secured by fixtures in and on your property, such as chandeliers, water heaters, some appliances, etc. 

Moreover, Nested Loans will likely have better rates than an unsecured loan, even if your credit is good. 

Origination and late fee — Best Egg charges an origination fee on all loans, which is a clear drawback. But it caps the fee at 3.5%, which is a reasonable amount if you qualify for a favorable rate.

Moreover, Best Egg charges a late fee of $15 per occurrence. Again not too surprising, but some competitors with the best loan options for home improvement don’t have late fees at all. 

Pros:

• Has an outstanding secured loan option
• Streamlined application and approval process
• Soft credit inquiry for pre-approval
• No prepayment fees
• Highly competitive rates for fair-credit borrowers

Cons:

• Only two term lengths to choose from
• No autopay discounts

Overview — LendingClub is one of the pioneers of the peer-to-peer lending space. However, starting in 2021, it’s switching to a traditional lending model. And that involves some exciting new options if you’re looking for the best place to get a home improvement loan.  

The information here is accurate as of its writing, but keep an eye out for LendingClub. There’s every reason to expect changes as the company eases into its new business model. 

Debt consolidation — LendingClub has a reputation for simplifying debt consolidation through balance transfer loans. You can use these loans to essentially “transfer” the balance from several other loans into one, thereby consolidating all your loans under one rate.  

It’s a great option if you’ve been forced to take less-than-favorable terms on loans to deal with home improvement repairs and emergencies. 

Joint applications — Like a few of the other best personal loans for home improvement, LendingClub allows co-signing for loans. Still, the two borrowers need to have a combined debt-to-income ratio no greater than 35%. 

Wide range of credit scores — With a FICO requirement of only 600, LendingClub is one of the most accessible lenders on this list. Granted, higher scores will qualify you for better rates and terms, but it may be worth it if you’re consolidating a lot of bad debt.

Pros:

• Competitive balance transfer loans
• Allows co-signed loans
• Soft credit inquiry for pre-approval
• Extensive member resources
• Allows you to cancel your loan up to five days after funding

Cons:

• Only two term lengths to choose from
• High minimum APR

Overview — Prosper is the only peer-to-peer lender to make it on this list and it’s mostly because of its competitive home equity line of credit options. However, it also has comparatively affordable loan options. 

As a peer-to-peer network, your loan will originate from one of the lenders on the network rather than Prosper itself. To help lenders assess your application, Prosper assigns you a rating.

Prosper ratings look at how loans similar to yours perform and may give you an edge over traditional credit ratings. 

HELOCs — Prosper offers home equity lines of credit to customers in Colorado, Florida, New Mexico, Alabama, Arizona, and Texas. A HELOC is likely to have better rates than even the best home improvement loans that are unsecured.   

You can learn more about HELOCs further down, but you should know that you’ll be putting your home equity up as collateral for it. 

Joint applications with a lower score — Prosper’s minimum accepted FICO score is 640 unless you’re applying for a joint loan. In that case, one of the applicants can have a FICO score as low as 600. 

Pros:

• HELOC available in some states
• Favorable joint loan for low-credit borrowers 
• Prosper rating may improve your creditworthiness
• Extensive member resources

Cons:

• Origination fee and late fees
• No autopay discount

Overview — RISE can be a real lifesaver for small home repairs and improvements if you’re in a hurry and have poor credit. 

RISE doesn’t disclose what the minimum credit score is to apply for a loan. However, it will do a soft credit inquiry, so the company definitely checks your credit. 

High APR — RISE also offers significantly lower loans than payday loans and it reports to a major credit bureau. So it can help you build a positive credit history if that’s the goal. 

Renovation loan — Given that RISE won’t offer you the best home improvement loan rate, you can judge the loan on the return it produces. If you use the loan to repair roof damage or get your house ready for sale, the loan could pay for itself. 

Flexible payment schedule — RISE loans don’t have prepayment penalties. Additionally, RISE can extend your due date under some circumstances if you can’t make a payment. 

Loan refinancing — If your creditworthiness improves, you can try to refinance your loan with RISE to receive a better rate. 

Credit Score Plus — RISE offers a free service that lets users view their TransUnion score and includes credit alert notifications.

Pros:

• Payment due date extensions
• Accepts bad credit scores
• Loan refinancing options
• No prepayment penalties
• Funding in as little as one day

Cons:

• High APRs
• $5,000 maximum loan

Overview — Like most other large banks, Wells Fargo offers a variety of unsecured personal loan options. But Wells Fargo gives exceptional loan terms and conditions compared to similar lenders.

And, those terms are even more competitive if you already have a Wells Fargo account. However, you don’t need to have one to apply for a loan. 

Low credit requirements — Wells Fargo’s home improvement loan calculator suggests you may qualify for a loan with a credit score as low as 620. Compared to other unsecured loan options, that’s quite forgiving. 

Customer relationship discount — If you possess a Wells Fargo checking account and if you enroll in autopay from a Wells Fargo deposit account, you may be entitled to better rates. According to Wells Fargo, those rates could net you a $10,000 loan with a 5.74% APR over three years.

Qualifying Wells Fargo customers can also apply for a loan secured by their Wells Fargo account for better rates.

Physical locations — All the other options on this list are online lenders. If you’re a fan of speaking with someone about loan options face-to-face, Wells Fargo has over 7,200 offices across the country. 

Only late fees — A Wells Fargo home improvement loan has no origination fee and no prepayment fees. However, late payments do incur late fees of up to $39.

Pros:

• Existing customer incentives and discounts
• Offices in every state
• Loan amount as small as $3,000
• No origination or prepayment fees
• Low credit score requirement

Cons:

• The application process can be relatively long
• No pre-approval available

Investing in your home is rarely a bad decision. It tends to increase your equity, and more often than not, it can return up to 100% of the investment made. 

But that doesn’t mean you should indiscriminately start applying for loans. 

There is still such a thing as bad debt when it comes to home improvement. Broadly speaking, the rules remain the same as with any other form of credit. Yet, there are a few important intervening factors when it comes to home improvement. 

And we’re going to discuss them in the following section. 

Types of Home Improvement Loans 

In the loans listed above, we mostly focused on unsecured loans. 

Unsecured loans don’t have a lot of qualifying criteria, as loans go. But that doesn’t mean they’re right for everyone, since they’re risky for lenders and risk is expensive; there are other, more favorable, loans available for home improvement if you meet their criteria. 

Still, unsecured loans often tend to be the best loan for home improvement without equity. And in those cases, can be perfectly appropriate.

Home Equity Loans

If you’ve got a lot of equity built up in your home, you can access it via a home equity loan.

In a nutshell, home equity loans allow you to borrow money secured by the value of your home. But you should be careful when borrowing against your home as lenders may require that you sell your home to pay off your debt if you can’t otherwise afford it. 

In most respects, HELs work like any other loan. 

And they can be the best type of loan for home improvement for people who have a lot of equity and poor credit.  

They can also take the form of a home equity line of credit (HELOC). 

Essentially, HELOCs work like a credit card — you receive a revolving credit that you can access as you need it and then you make payments for the amount you use rather than the full amount you qualify for. 

A HELOC is often an ideal solution if you’re not sure how much a home improvement project will cost. 

HUD Title 1 Property Improvement Loan

Another option for home improvement loans is the Federal Housing Administration’s Title I loan program. 

The loans originate from FHA-approved lenders but they’re insured by Housing and Urban Development funds. 

So, what does that mean for you?

Since the lion’s share of the loan is insured by state funds, it’s much less of a risk for lenders. Less risk means better loan terms for you.

Title I property loans aren’t easy to qualify for, and different lenders will have different criteria. But they can often be the best home improvement loans for bad credit borrowers. 

You can find a list of HUD-approved lenders on the HUD website and find more information about this kind of loan from a HUD-approved counseling agency in your county. 

Cash-Out Refinance

A cash-out refinance basically replaces your existing mortgage balance for another one with a higher value. 

So, if you owe $100,000 on your mortgage, you can use a cash-out refinance to get a $150,000 mortgage and use the extra $50,000 for home improvements. 

It can have much better rates than a HELOC and even a home equity loan. 

Zero-Interest Home Improvement Loans

Depending on your location, you may be able to apply for one or more state assistance programs to finance home renovations. 

Title I loans are federally funded, but many counties and smaller state agencies offer residents assistance based on location and demographics. In exceptional cases, you may even qualify for a zero-interest loan to make emergency home repairs. 

The best place to start looking for these is with your state, local, and tribal governments.  

Another popular option is to look for credit cards with introductory 0% interest offers. Some provide zero-interest periods of up to 18 months, and you can chain several such offers to have even longer with no interest. 

Home Improvement Loans for Veterans

If you’re a veteran looking for a personal loan, the USAA is the best place to start. The USAA’s rates are some of the best for borrowers with low credit scores. And the USAA has an exceptional overall satisfaction rating. 

However, there are numerous assistance programs available for veterans all over the country — both at the state and federal levels. 

Before committing to a loan, contact the Veterans Affairs home loans service. Their staff can help you figure out if you qualify for any aid and what the best way is to finance your project. 

Characteristics of a Good Loan

Now that we’ve covered some ways to find the best home improvement loans, it’s worth getting into how to distinguish between good and bad loans. 

Annual Percentage Rate

Just about every loan you get will have an associated annual interest rate. That’s the percent of the loan’s balance you have to pay per year. 

Generally speaking, the most accessible type of credit is a credit card. So you should always try to get a better APR on your loan than you could get with a credit card. Of course, there will be exceptions if you need large sums of money or quick funding. 

As a point of reference, take into account that 39 states have APR caps that average out to about 25% APR.  

It may even be worth your while to use a credit repair service before applying for loans to qualify for better rates.

Loan Term Length

The best home improvement loan rate will come with short lending periods. 

As a rule, there’s an inverse relationship between how long you get to repay a loan and your monthly payments. That is, the longer the term, the lower the monthly payments. But longer terms mean more risk and therefore higher rates. 

Ideally, you want to choose the shortest term you qualify for while still being able to afford the monthly payments. 

Associated Fees

Start by trying to qualify for loans without origination fees. They’re almost always better than ones with the fee. If you cannot qualify, avoid origination fees higher than 8%. 

Even the best interest rates on home improvement loans can be invalidated by a high origination fee.

Yet, fees aren’t a problem unless you plan on being late on payments. But you should still gravitate to loan providers with flexible payment dates. 

And it’s best to avoid loans with prepayment fees altogether, if possible. 

Making upgrades, improvements, and renovations to your home is usually a sound investment. Just keep these two things in mind when comparing home improvement loans reviews:

• Try to make your loan period as short as possible to avoid interest accrual, and prepay when possible. 
• As with all loans, it’s best to avoid taking home improvement credit for frivolous expenses.

At this point, you should have a pretty solid idea of what types of loans are best suited for a home improvement and how to get them.