Best Home Improvement Loans of 2025

Home Improvement Loans: A Comprehensive Guide to Funding Your Dream Project

When it comes to home improvement projects, whether you’re planning to build a deck, remodel your bathroom, or replace your roof, the cost can quickly add up. While saving up for these projects is ideal, it’s not always feasible. This is where home improvement loans come into play. A personal loan can provide the necessary funds to turn your vision into reality. In this guide, we’ll explore the best home improvement loan options, how to choose the right one for you, and what you need to know before applying.

Top Home Improvement Loan Options

1. LightStream Personal Loan
   LightStream offers some of the lowest APRs available, making it an excellent choice for borrowers with good credit. With loan amounts ranging from $5,000 to $100,000 and terms between 2 to 12 years, LightStream provides flexibility for both small and large projects. The loan process is quick, with approval decisions made shortly after applying and funds often disbursed the same day. LightStream also offers a 0.50% autopay discount and has no fees. However, it’s important to note that LightStream is only available to borrowers with good credit, and there’s no pre-approval option.

2. SoFi® Personal Loan
   SoFi is a great option for those who need a large sum of money, with loan amounts up to $100,000. It offers competitive APRs and no fees, making it a strong contender for home improvement projects. SoFi also provides a 0.25% autopay discount and a 0.25% direct deposit discount, which can help lower your interest rate. However, SoFi has a high minimum credit score requirement of 680, and the minimum loan amount is $5,000, making it less ideal for smaller projects.

3. Avant Personal Loan
   Avant is a good choice for borrowers with less-than-perfect credit. While most Avant borrowers have credit scores between 600 and 700, the lender doesn’t have a strict minimum credit score requirement. Avant offers loan amounts from $2,000 to $35,000, with funds typically deposited the next business day after approval. The lender also offers great customer service, with a mobile app and phone support available 13 hours a day. However, Avant charges multiple fees, including an administration fee of up to 4.75%, and has a high maximum APR of 35.99%.

4. First Tech Personal Loan
   If you’re looking for a small loan for minor home repairs, First Tech is a great option. It offers loans as low as $500, with no fees and competitive APRs. First Tech also doesn’t charge prepayment penalties, allowing you to pay off your loan early without additional costs. However, membership is required, and while it’s relatively easy to join, it may not be worth it for larger projects since the maximum loan amount is $35,000.

5. Wells Fargo Personal Loan
   Wells Fargo offers loans ranging from $3,000 to $100,000, with terms as short as 12 months. The bank provides low interest rates and is the only brick-and-mortar option on our list, making it a good choice for those who prefer in-person support. However, Wells Fargo has faced trustworthiness issues in the past, including an F rating from the Better Business Bureau. This may make some borrowers hesitant to choose this option.

6. Prosper Personal Loan
   Prosper is a peer-to-peer lending platform that allows co-borrowers, making it a good option for those who may not qualify for a loan on their own. Loan amounts range from $2,000 to $40,000, with terms between 2 to 5 years. Prosper typically approves loans within one day, and funds are deposited within one to three business days. However, Prosper charges origination fees ranging from 1.00% to 9.99%, which can increase the overall cost of the loan.

7. Discover Personal Loan
   Discover offers loans up to $40,000 with competitive APRs and no fees. The application process is quick, and funds can be deposited as soon as the next business day. Discover also allows borrowers to avoid interest charges by paying off the loan early without penalties. However, the maximum loan amount of $40,000 may not be sufficient for larger projects.

8. Best Egg Personal Loan
   Best Egg is known for its fast funding, with half of its borrowers receiving their money the day after approval. The lender offers loans up to $35,000, with terms ranging from 3 to 5 years. Best Egg also allows borrowers to prepay their loans without penalties. However, the lender charges an origination fee of at least 4.99% for loans with terms of four years or longer.

How to Choose the Best Home Improvement Loan

Choosing the right home improvement loan involves considering several factors, including interest rates, fees, loan amounts, term lengths, funding speed, and eligibility requirements. Here are some key considerations:

• Interest Rates: The APR is a critical factor, as it determines how much you’ll pay over the life of the loan. Look for lenders offering competitive APRs, and don’t hesitate to compare rates from multiple lenders.

• Fees: Some lenders charge origination fees, late payment fees, or prepayment penalties. Make sure to factor these into your total cost when comparing loan options.

• Loan Amounts: Consider the cost of your project and choose a lender that offers loan amounts within your needs. If you’re planning a major renovation, you’ll want a lender that offers higher loan limits.

• Term Length: The term length affects your monthly payments and the total interest you’ll pay. A longer term reduces your monthly payments but increases the total interest over the life of the loan.

• Funding Speed: If you need funds quickly, look for lenders that offer same-day or next-day funding.

• Eligibility Requirements: Most lenders require a good credit score and stable income to qualify for the best rates. Some lenders, like Avant, are more lenient with credit scores, making them a better option for borrowers with less-than-perfect credit.

Home Improvement Loan Alternatives

Personal loans aren’t the only way to finance home improvements. Here are some alternatives to consider:

1. Home Equity Loans and HELOCs: These loans use your home as collateral and often offer lower interest rates. However, they come with the risk of foreclosure if you fail to repay the loan.

2. Cash-Out Refinance: This option allows you to take out a new mortgage with a larger loan amount, providing funds for home improvements. However, it may result in higher monthly payments and closing costs.

3. Credit Cards: While credit cards can be convenient, especially for smaller projects, they often have high interest rates. Consider using a card with a 0% APR introductory period to avoid interest charges.

Pros and Cons of Home Improvement Loans

• Pros:

  • Fixed interest rates and monthly payments.
  • No need to put your home up as collateral for unsecured loans.
  • Flexibility in loan amounts and terms.
• Cons:
  • Higher interest rates compared to secured loans like HELOCs.
  • Some lenders charge fees.
  • The best rates and terms are typically reserved for borrowers with good or excellent credit.

FAQs About Home Improvement Loans

1. What are common reasons to get a home improvement loan?
   Common reasons include covering unexpected repairs, financing renovations to increase home value, and paying for new roofs or solar panels.

2. How much does a home improvement loan cost?
   The total cost depends on the loan amount, APR, term length, and any associated fees. Longer terms reduce monthly payments but increase total interest.

3. What is the average interest rate for home improvement loans?
   Interest rates typically range from 11% to 33%, depending on the borrower’s creditworthiness and loan terms.

4. What credit score do I need for a home improvement loan?
   While requirements vary by lender, a credit score of 580 or higher is often needed to qualify for competitive rates and terms.

5. Are interest payments on home improvement loans tax-deductible?
   Generally, no, unless the loan is secured by your home, such as a HELOC or home equity loan.

By carefully considering your options and weighing the pros and cons, you can find the best home improvement loan to fund your project and achieve your goals. Always compare offers from multiple lenders and consider factors like interest rates, fees, and repayment terms to make the most informed decision.