The Best Home Improvement Loans of 2021

The Best Home Improvement Loans Options

The Best Home Improvement Loans Options


If you’re looking to perform some renovations or need to make repairs, a home improvement loan could provide the financing you need to pay for the project. However, finding the best way to finance home improvements takes a little time and research. It’s crucial to compare factors like minimum credit score requirements, maximum loan limits, and interest rates to make sure you find the best home improvement loans for your situation and needs.

The loans listed here are personal home improvement loans, so it’s important to compare any origination fees, late fees, prepayment fees, and other fees associated with each loan before applying. While a loan may look good based on the loan amount and interest rate, you don’t want to pay too much in fees. Here, we’ll break down the best home improvement loans and how to make the best decision that will pay off in the long run.

  2. RUNNER-UP: LightStream
  3. BEST FOR SMALL PROJECTS: Marcus by Goldman Sachs
  4. BEST BANK: Wells Fargo

The Best Home Improvement Loans Options

© Provided by Bob Vila
The Best Home Improvement Loans Options


What to Consider When Choosing Home Improvement Loans

When reviewing the best loan for home improvement, make sure to compare the key features of each loan. These include the interest rate, loan amount, minimum credit score, and loan term. You want to compare apples to apples to ensure you find the best way to pay for home improvements. Comparing the fees to obtain the loan is crucial when shopping for the best home renovation loans.


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Prequalification and Application

Some, but not all, lenders allow borrowers to prequalify for a home improvement loan, which could give them an idea of how much they may qualify to receive, how much their monthly payment could be, and what the repayment terms might be. To do so, borrowers will need to provide such personal information as name, address, birth date, Social Security number, and income. They also may be asked how they plan to use the loan funds. Prequalification may take a few minutes or possibly longer. If borrowers are prequalified, the lender will use their prequalification information as part of the application.

When prequalifying for a loan, it’s essential to know if the lender will complete a soft or hard credit check. Soft credit checks won’t affect a borrower’s credit score, but a hard check will. Mortgages typically involve a hard credit check, but smaller personal loans like home improvement loans often only require a soft check.

The loan application will contain much of the same information a borrower would provide to prequalify. This includes the personal information listed above, as well as proof of identity, bank statements, and pay stubs. Reviewing and approving your application may take longer than prequalification.

Credit Score

Every lender has its own benchmark for the minimum credit score required to qualify for the best loans for home improvement. While many lenders prefer a minimum credit score of 660, especially if you want a mortgage-backed loan, some companies will accept a lower credit score. The trade-off is that interest rates may be higher than for borrowers with a higher credit score. A general rule is that the higher a borrower’s credit score, the lower their interest rate.

Suppose a borrower is seeking a home improvement loan that is unsecured, such as a personal loan. In that case, lenders also prefer borrowers with higher credit scores because those borrowers appear to be more likely to repay the loan as agreed.

Loan Amount

Not all home loan lenders offer the same loan amounts. Therefore, borrowers need to determine how much the project will cost so they have a firm amount on how much they need in a home improvement loan. Once they have this information in hand, they will need to shop around to find lenders willing to match the amount they need. Eliminating lenders who are unable or unwilling to offer the loan amount they need will help narrow down the selection of lenders, which can be helpful when they are shopping for the best home improvement loans.

Rates and Fees

When reviewing the terms of a home improvement loan, one key feature to look at is the annual percentage rate (APR). The APR is the amount someone pays for borrowing the money. It includes the interest rate as well as all additional fees.

Origination fees are associated with opening a new account with a bank or broker. Borrowers can incur prepayment fees if they attempt to pay off the entire loan amount before the loan terms are over. Lenders want to keep collecting interest for as long as possible, so longer loan terms are more favorable for them. Other fees can include those for loan processing, late payments, or insufficient funds.

The lower the APR is on a loan, the less the borrower will pay over the life of the loan. The APR is based on several factors, most notably credit score and income. Typically, the higher a borrower’s credit score, the lower the APR. Also, a higher income can result in a lower APR because it shows someone has the means to repay the loan as agreed.

Repayment Terms

When it comes to repaying a home improvement loan, term lengths vary based on the lender as well as a borrower’s creditworthiness. The typical repayment term for a home improvement loan is between 1 and 7 years with monthly payments. The better a borrower’s credit score, the better their repayment terms typically will be.

It’s essential to check the repayment terms to see if the borrower will incur a prepayment penalty if they decide to pay off the loan early. The amount of a prepayment penalty may be more costly than if they just pay off the loan as agreed.


Although not all lenders offer discounts, some do when a borrower takes out a home improvement loan. For instance, some lenders will offer a discount if they sign up for its autopay service to automatically pay the monthly loan payment. If a borrower is a current customer with a bank or lender, they also may qualify for a loyalty discount. It’s important to ask any lender what discounts are available. Often, this information is not readily available, so it’s important to be proactive and ask directly about discounts. Otherwise, a borrower could miss out on additional savings, even on the best home improvement loans.

Our Top Picks

To help you find the best home improvement loans, we compared loan terms and other factors to find the best way to finance home improvements.


Why It Made the Cut: Unlike many other traditional financial institutions, SoFi offers borrowers the option for prequalification, boasts competitive interest rates, and eliminates late fees, prepayment fees, and origination fees.

There’s a lot to like about a home improvement loan from SoFi. The company offers loans with limits as high as $100,000 with no late, prepayment, or origination fees. Unlike many other lenders, SoFi offers prequalification without a hard inquiry so you can get an idea of what loan amount you could receive as well as possible loan terms without hurting your credit score.

While SoFi offers competitive interest rates, a borrower likely will need a good credit score to receive a home improvement loan at reasonable rates. Currently, SoFi requires a minimum credit score of 680, which could be a lofty goal for some borrowers. That being said, SoFi is still a top lender to consider for home improvement loans.


  • Prequalification offered: Yes
  • Minimum credit score: 680
  • Loan amount: $5,000 to $100,000
  • APR: 4.99 to 19.63%
  • Term: 2 to 7 years


  • No late, prepayment, or origination fees
  • Borrowers can prequalify with a soft credit check
  • Unemployment protection for borrowers
  • Competitive interest rates


  • Higher minimum credit score of 680 required



Why It Made the Cut: LightStream prides itself on offering loans to borrowers with a strong history of financial responsibility and good credit across multiple account types.

LightStream offers a variety of loan products, including home improvement loans, with competitive interest rates. Borrowers have the option to apply online or use the app and could receive their funds the same day if their loan application is approved before 2:30 p.m. EST. If a borrower signs up for autopay before receiving the loan, they could receive a 0.5 percent discount on the loan. Also, through its Rate Beat Program, LightStream will offer a rate .10 percentage points lower than a competitor’s rate provided certain conditions are met.

However, it could be hard for some borrowers without an extensive credit history to qualify for a LightStream home improvement loan. The lender looks at credit history to see if the borrower has various accounts, including credit cards, installment loans (such as a car or student loan), and a mortgage loan. For
borrowers who meet these requirements, though, LightStream is a great option to consider.


  • Prequalification offered: No
  • Minimum credit score: 660
  • Loan amount: $5,000 to $100,000
  • APR: 4.49 to 20.49%
  • Term: 2 to 7 years


  • Borrowers receive a 0.5 percent discount for using autopay
  • Same-day funding available for loans approved before 2:30 p.m. EST
  • Rate-matching program for eligible borrowers


  • Loan approval requires several years of credit history with multiple account types



Why It Made the Cut: Marcus by Goldman Sachs offers decent loan terms to borrowers with a minimum credit score of 660 and even provides prequalification with a soft check, so a borrower’s credit doesn’t get dinged.

If a homeowner is planning a small-scale home renovation, Marcus’s $40,000 loan limit may be more than enough to finance the project. Marcus by Goldman Sachs does offer prequalification with a soft credit check, so they can see what a borrower’s loan terms may be without hurting their credit score. And if a borrower makes 12 consecutive payments, the lender allows them to defer one payment, which could be helpful if money gets tight during the life of the loan. The company will also allow borrowers to consolidate debt with third-party creditors—a unique feature among financial institutions.

Marcus by Goldman Sachs also doesn’t offer the option of having multiple borrowers on one loan, so homeowners may not benefit from a cosigner with a great credit score. However, if the loan terms work for the home improvement a borrower is planning, Marcus by Goldman Sachs is a worthy lender.


  • Prequalification offered: Yes
  • Minimum credit score: 660
  • Loan amount: $3,500 to $40,000
  • APR: 6.99 to 19.99%
  • Term: 3 to 6 years


  • Direct payments to third-party creditors for debt consolidation available
  • Borrowers can prequalify with a soft credit check
  • Borrowers can defer one payment if they make 12 consecutive payments


  • Multiple borrowers are not allowed on one loan



Why It Made the Cut: For those who want to bank with an established financial institution, Wells Fargo offers a lot of flexibility for borrowers looking for a home improvement loan—and existing customers may benefit even more.

When shopping with Wells Fargo for a home improvement loan, expect a lot of flexibility in loan terms and limits, with a minimum loan amount of $3,000, a maximum loan amount of $100,000, and a minimum 1-year repayment window. In addition, borrowers who already do business with Wells Fargo may receive discounts on their loans.

Currently, only existing customers can apply for a home improvement loan online. All others will need to visit a brick-and-mortar location to complete an application, which may not be convenient for all borrowers. Of course, many borrowers like the option of meeting face-to-face with Wells Fargo associates, which many other lenders don’t offer.


  • Prequalification offered: No
  • Minimum credit score: Not specified
  • Loan amount: $3,000 to $100,000
  • APR: 5.74 to 19.99%
  • Term: 1 to 7 years


  • Flexible loan amounts and lending terms available
  • Borrowers can visit brick-and-mortar bank locations
  • Discounts available for existing customers


  • Online application is only available for existing customers



Why It Made the Cut: If a borrower’s credit history is not in the best shape and they have a lower credit score, Upgrade could be the right lender to provide them with a home improvement loan.

A new player in the lending industry—Upgrade was founded in 2017—Upgrade seeks to offer affordable and responsible loans, including home improvement loans. For borrowers with lower credit scores, this could be especially beneficial given they need a minimum credit score of only 560 to qualify. If they already have an Upgrade checking account, they also could qualify for a discount on their home improvement loan.

Upgrade offers a wide APR range that tops out at 35.47 percent, which could negatively impact borrowers with a low credit score. In addition, Upgrade loans also may include several fees, including origination fees, late fees, and insufficient funds fees. However, Upgrade is still a great choice that opens the door for more borrowers to make improvements to their homes.


  • Prequalification offered: No
  • Minimum credit score: 560
  • Loan amount: $1,000 to $50,000
  • APR: 5.94 to 35.47%
  • Term: 2 to 7 years


  • Borrowers need a minimum credit score of 560
  • Small loan amounts available
  • Discount available for borrowers with Upgrade checking accounts


  • Wide APR range
  • Borrowers may incur origination, late, and insufficient funds fees


Our Verdict

When shopping for the best home improvement loans, SoFi comes out on top because it doesn’t charge a lot of fees and offers competitive interest rates. LightStream is our runner-up thanks to its rate-matching program and the possibility of same-day funding if approved.

How We Chose the Best Home Improvement Loans

To determine the best home improvement loans, we reviewed several factors for each lender, including minimum credit score requirements, available loan amounts, APRs offered, loan terms, and whether prequalification was offered. We also checked to see what, if any, fees were charged as well as possible available discounts. In addition, we looked to see if lenders offered added benefits to borrowers, such as unemployment protection, same-day funding, and online servicing. Each lender also was reviewed based on its brand reputation. This curated list was developed from extensive research, but your individual loan experience may vary from the information shared here.

Before You Choose One of the Best Home Improvement Loans

The most straightforward avenue is to pay cash if you’re starting a home improvement project. However, not everyone has the money in hand to pay for a large bill, or paying for the project up front might jeopardize a homeowner’s quality of life for a period. That’s where home improvement loans can be helpful tools.

When trying to decide what type of loan is best for home improvements, it’s important to note that not all home improvement loans fit every borrower’s needs or financial situation. In fact, a home improvement loan may not even be the right choice to pay for home renovations. For instance, if a homeowner doesn’t need a considerable loan amount, they may do better by finding the best cr
edit card for home renovation. Credit cards are simpler to obtain, but they may incur higher interest rates, even with one of the best credit cards for home improvement. And since monthly expenses can, using a credit card can result in ongoing debt that might be difficult to pay off.

On the other hand, if a homeowner needs a large loan amount, a home equity loan or home equity line of credit might offer them a better interest rate and longer loan term than even the best home improvement loan. Home equity loans are secured, though, meaning the lender has collateral if a borrower defaults on payments. This means that the stakes are higher, and if a borrower runs into a situation where they can’t make their payments, the lender could levy their home.

Cost of Using One of the Best Home Improvement Loans

Before signing on the dotted line for one of the best home improvement loans, it’s important to review the costs of the loan. In addition to the interest rate on the loan, many lenders also charge hefty fees that add to the cost of the loan. For instance, some lenders charge origination fees ranging between 1 and 8 percent of the loan amount. Other expenses could include late payment fees, insufficient funds fees, prepayment penalties, and additional fees that will add to the cost of the loan. The total amount of these fees could make one of the best home improvement loans more costly than other financing options available to pay for home improvements.

The Advantages of Using One of the Best Home Improvement Loans

Using one of the best home improvement loans could be the most affordable option for paying for the improvements or repairs a home needs without having to pay a daunting amount of money up front. There are some benefits to choosing a home improvement loan, including:

  • Repairs and upgrades can increase a home’s value. Remodeling the kitchen, refinishing hardwood floors, and adding landscaping have some of the best returns on investment.
  • Homeowners don’t have to wait to save up money to make repairs, causing the situation to worsen and become costlier the longer it’s left untreated.
  • Personal home improvement loans have fixed monthly payments, so homeowners can budget accordingly and know exactly how much they’re paying.


When shopping for the best home improvement loans, it’s essential to know exactly what you are shopping for regarding interest rates, loan amounts, loan terms, and minimum credit score requirements. Having this knowledge beforehand could save you valuable time when talking to lenders. It also could provide insight on how to improve your financial situation before applying for any loan.

Q. What kind of loan should I get for home improvements?

A personal home improvement loan could provide the best way to pay for home improvements. But the type of loan a borrower opts for will ultimately depend on the extent of the renovations. For example, an FHA 203(k) rehab loan might be better if a borrower is buying a fixer-upper and needs to complete extensive, whole-home remodeling. Borrowers might benefit from one of the best home improvement credit card options for small-scale projects.

Q. What credit score do I need to qualify for a home improvement loan?

Many lenders require a minimum credit score of 660 to qualify for a home improvement loan, although some lenders may have lower or higher minimum requirements.

Q. Are home improvement loans tax-deductible?

If your home improvement loan is secured by your home, such as with a home equity loan or home equity line of credit, the interest and fees on the loan could be tax-deductible.

Q. Do banks offer home improvement loans?

Yes, many banks like Wells Fargo offer home improvement loans. Some banks offer discounts for existing bank customers, and some borrowers may prefer consolidating their loans and accounts to one financial institution. However, borrowers should compare the rates and terms of bank loans against other lenders to ensure they’re getting the best deal.