5 best home improvement loans

When you’re ready to tackle some of the home repairs or remodel projects on your to-do list, a home improvement loan can provide the money you need to take those projects from dream to reality.

We’ve rounded up our picks for the best home improvement loans based on factors like loan amounts and fees — and the ability to apply for pre-qualification. Pre-qualifying lets you see your estimated interest rates and costs before you apply formally and subject yourself to a hard credit inquiry, which can hurt your credit scores a bit.

Keep in mind these picks are for personal loans. You may have other options like a home equity loan or home equity line of credit.

Best for competitive rates: LightStream

Why LightStream stands out: Unlike many personal loan lenders that cap loan amounts at $40,000 or less, online lender LightStream offers loans up to $100,000. That makes it possible for qualified applicants to apply for the funds they need for larger-scale home improvements.

There are other lenders on our list that offer loans in large amounts. But LightStream’s competitive interest rates, combined with an APR discount for autopay enrollment and a rate-matching program, really make it stand out.

  • Competitive rates: LightStream offers competitive interest rates and an APR discount for people enrolled in autopay. The lender also has a rate-matching program that promises to beat competitor rates by a small percentage if certain conditions are met.
  • Good credit necessary: LightStream loans are targeted for people with strong credit, and the company says people with “excellent” credit receive the lowest rates.
  • No ability to prequalify: Applying for a home improvement loan with LightStream will result in a hard credit inquiry, which can lower your credit scores by a few points.
  • Multiple repayment options: LightStream offers repayment terms of 24 months to 144 months, but if you opt for a longer loan term, you’ll likely pay more in interest over the life of the loan. Loan terms between 85 months and 144 months may only be available if you have a loan amount of at least $25,000.

Best for secured loans not based on home equity: Wells Fargo

Why Wells Fargo stands out: Second mortgages such as home equity loans use your house as collateral, which means if you default on your loan, the lender may foreclose on your house. But Wells Fargo offers a secured loan option that lets you use money in a savings account or CD as collateral instead of your home. You’ll have to be a Wells Fargo customer to qualify though.

Here are some additional details about Wells Fargo personal loans.

  • High loan maximums: Wells Fargo offers unsecured personal loans up to $100,000 and secured personal loans up to $250,000 (up to the amount in your CD/savings account).
  • Competitive rates: Wells Fargo offers competitive interest rates on its personal loans and provides a rate discount to customers with a qualifying checking account who sign up for autopay.
  • No ability to prequalify: Like LightStreamyou must complete a formal loan application with Wells Fargo to see rates and loan terms, which will result in a hard credit inquiry that can lower your credit scores by a few points.
  • Repayment period: Wells Fargo offers loan terms of 12 months to 36 months for unsecured loans under $5,000, and 12 months to 84 months for unsecured loans greater than $5,000. Terms may extend up to 120 months for loans secured by a CD or savings account.

Best for small home improvement projects: Marcus

Why Marcus stands out: Marcus offers loan amounts ranging from $3,500 to $40,000, making it a good choice for people who have smaller home renovation projects that they want to take off their to-do lists. You’ll likely need fairly strong credit to qualify. The lack of fees along with the option to apply for prequalification distinguish Marcus from the other lenders we picked that also offer smaller loans.

Here are a few more things to know about personal loans from Marcus.

  • No-fee promise: Marcus says it doesn’t charge you a sign-up (origination) fee, or prepayment or late fees on its personal loans. But remember that if you pay late, it may negatively affect your credit.
  • Prequalification application: Marcus gives you an opportunity to apply for prequalification with a soft credit inquiry, so you can preview estimated rates and terms without affecting your credit scores. Prequalification doesn’t guarantee approval, though, and your final terms may change if you formally apply. A formal application may also result in a hard credit inquiry.
  • On-time payment reward: If you’ve made 12 consecutive on-time payments, you may be able to defer a payment. If you take advantage of this feature, your loan term extends by one month — but Marcus pauses interest accrual during the deferral period. If you ever miss a payment or pay late, you won’t be able to take advantage of this feature at any time during your loan term.

Best for applying with a co-applicant: SoFi

Why SoFi stands out: SoFi lets people apply for a personal loan with a co-applicant. If your credit needs some work, applying with a co-applicant who has good credit may improve your chances of qualifying for a loan or snagging a lower interest rate. Two other lenders in our ranking, Wells Fargo and LightStream, also let you add co-applicants. But SoFi stands out from these lenders because of its member perks and prequalification option.

Here’s what you should know about SoFi personal loans.

  • Member perks: If SoFi approves you for a loan, you become a member of its community. As a member, you’ll get perks like unemployment protection under certain conditions, access to financial planners, referral bonuses, personalized career advice and more.
  • No-fee promise: SoFi doesn’t charge late, prepayment or origination fees on its loans. Of course, if your loan payments are late, that may negatively affect your credit scores.
  • Loan amounts: While the minimum amount you can borrow may vary by state, SoFi offers loans ranging from $5,000 to $100,000 to accommodate home improvement projects of different sizes. If you apply through Credit Karma you may see different loan amounts and terms.
  • Ability to prequalify: SoFi uses a soft credit inquiry to let people check their estimated rates and loan terms without affecting their credit scores before they submit a formal application. If you prequalify, keep in mind that your final approval or terms may change — and a formal application involves a hard credit inquiry.

Best for considering factors in addition to credit: Earnest

Why Earnest stands out: When evaluating your application, Earnest considers the usual criteria, including your credit history, ability to repay and debt-to-income ratio. But the company also considers other factors such as your spending habits, education level and career path when making lending decisions, which can be helpful if you’re just starting out.

To apply, you must let Earnest view your checking, savings and retirement accounts, so the company can see how much you save and spend compared to what you earn.

  • Good credit required: Earnest requires minimum credit scores of 680 to qualify for one of its personal loans. If your credit scores don’t meet that threshold, consider applying with a different lender.
  • Loan amounts: Earnest’s loan amounts range from $5,000 to $75,000, except in California, where the minimum loan amount is $10,000. That gives you flexibility in how much you can apply to borrow.
  • Few fees: Unlike some online lenders that charge a variety of fees on the personal loans they offer, Earnest doesn’t charge origination, prepayment, early-payment or extra-payment fees. But you can be charged a fee if your payment is returned.
  • Prequalification application: If you want to check your potential rate, Earnest will use a soft credit inquiry that won’t hurt your credit scores. But remember that your loan terms and approval may change after you formally apply (and applying may result in a hard credit inquiry).

What you should know about home improvement loans

There are several types of loans that can be used for home improvement projects — home equity loans, home equity lines of credit, or HELOCs, and personal loans. If those options aren’t appealing, you could also consider refinancing your home or tapping into a low-interest credit card with promotional terms.

Here’s what you should know about some of your borrowing options.

Home equity loans and home equity lines of credit

Home equity loans and HELOCs both allow you to borrow money based on any equity you have in your home. The amount can also vary based on your income, credit and other factors.

If you get a home equity loan or HELOC, your house becomes collateral. You may get a lower rate with this type of secured financing than you would with an unsecured personal loan. But you also may pay more fees because you may have to pay for closing costs just like you did when you got the original mortgage.

And if you default on your loan, the lender may foreclose on your house to recoup the money you owe. Before getting a home equity loan or HELOC, make sure you can repay the loan on time since you risk losing your home with this type of borrowing.

Personal loans

Many lenders offer personal loans that can be used to complete home improvement projects. A personal loan may be a good option if you don’t have enough equity in your home to qualify for a home equity loan or HELOC — or if you don’t want to use your home as collateral.

It’s a good idea to shop around, compare your financing options and make sure you can get a reasonable rate before you decide to use a personal loan for home improvements.

How we picked these loans

We reviewed more than a dozen home improvement loans from a variety of lenders to come up with our top picks. The criteria used to make our selections included interest rates, fee structures, loan amounts, pre-qualification options and other perks like rate-beat programs, on-time payment rewards and resources to help improve your financial health.

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