Best Home Improvement Loans: Compare Rates and Lenders

How to apply for a home improvement loan

Home improvement loans vary in requirements and timing, based on whether you get a personal loan or you rely on home equity. 

Documents and requirements needed

You can streamline the process by gathering needed information and documentation ahead of time. Some basic items you usually need to apply for a loan include:

• Legal name
• Address
• Birthdate
• Social Security number
• State-issued ID number (such as a driver’s license or passport)
• Phone number
• Email address

You might also be required to provide access to your bank account or upload bank statements. If you’re applying for a home equity loan or Heloc, you might need to get a home appraisal and complete additional paperwork.

Review lender requirements ahead of time so you’re prepared to provide documentation.

Steps to improve approval chances

If you’re concerned about getting approved for a home improvement loan, there are things you can do to increase your chances.

• Improve your credit score: As long as you don’t need the loan immediately, you might be able to increase your credit score over a period of months. Make on-time payments, dispute credit report errors and pay down your current debt, especially revolving debt like credit cards.
• Find a cosigner: If you can’t qualify for a loan on your own, apply with a lender that allows cosigners. A cosigner with a high income and good credit might help you get approved. But know that they assume responsibility for the debt, and would be on the hook if you don’t make payments.
• Secure the loan: Valuable collateral can potentially improve your chances of approval. If you secure a loan with home equity or some other valuable item, a lender might be willing to approve you since they can repossess your property if you default.

Timeline for loan approval and funding

How quickly you get your funds depends on the type of loan. A personal loan for home improvement can be funded in as little as one business day. On the other hand, a home equity loan or Heloc might take several weeks to process. Government loans for home improvement also usually have a longer time frame.

Methodology 

Our team gathered over 800 data points on 31 lenders to identify the best personal and home equity loans for home improvement. We considered a wide range of criteria, including interest rates, repayment terms, loan fees, maximum loan amounts, eligibility, customer satisfaction and lender access, funding times and discounts. For further insight, please read our full methodology.

FAQ

What is the best type of loan for home improvement?

Consider your needs and financial situation when determining the best type of loan for home improvement. A personal loan can make sense if you need fast funding and don’t want to use home equity as collateral. On the other hand, if you want a larger amount and longer repayment, a home equity loan or Heloc might make more sense.

Can I use a personal loan for home renovations?

In most cases, yes, you can use a personal loan for almost anything, including home renovations. But not all lenders approve all loan purposes. 

How does a Heloc compare to a home equity loan for renovations?

A Heloc is a revolving line of credit that acts like a credit card secured by your home. The rate might be variable. Your house also secures a home equity loan, but you receive the money as a lump sum, and rates are generally fixed. 

What credit score do I need for a home improvement loan?

Every lender has its own requirements. However, you generally need at least fair to good credit to qualify, although some lenders allow those with lower credit scores to borrow.

Are there government programs for home renovation financing?

Yes, there are various HUD programs aimed at helping homeowners renovate their houses.

With original reporting by Tanza Loundenback and Aly J. Yale