Top Home Improvement Loan Providers
Quick Overview
- LightStream: Best for Excellent Credit
- SoFi: Best for Large Projects
- Prosper: Best Peer-to-Peer Lending Option
Home Improvement Loan Providers – Comparison Table
| Company | Overall Rating | Lowest APR | Highest APR | Min Loan Amount | Max Loan Amount | Min Loan Term | Max Loan Term | Quick payout | Accepts bad credit: | |
|---|---|---|---|---|---|---|---|---|---|---|
recommended
| 8.99% | 25.81% | $5,000 | $100,000 | 2 Years | 7 Years | Yes | No | Explore more | |
| 7.95% | 35.99% | $2,000 | $35,000 | 3 Years | 5 Years | No | No | Explore more |
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recommended
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| Get Started |
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| Company | Overall Rating | Lowest APR | Highest APR | Min Loan Amount | Max Loan Amount | Min Loan Term | Max Loan Term | Quick payout | Accepts bad credit: | Get Started |
|---|---|---|---|---|---|---|---|---|---|---|
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recommended
| 8.99% | 25.81% | $5,000 | $100,000 | 2 Years | 7 Years | Yes | No | Explore more | |
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| 7.95% | 35.99% | $2,000 | $35,000 | 3 Years | 5 Years | No | No | Explore more |
1. LightStream: Best for Excellent Credit
LightStream, a division of Truist Bank, offers unsecured home improvement loans with competitive rates for borrowers with strong credit profiles.
Pros:
- Low interest rates for qualified borrowers
- No fees or prepayment penalties
- Same-day funding available
- Loan amounts up to $100,000
Cons
- Requires excellent credit (typically 660+)
- No option to pre-qualify with a soft credit check
2. SoFi: Best for Large Projects
Chosen 17,097 times- See Rates in 60 seconds
- High Trustpilot Score
- NO fees required and same-day funding
- Unemployment Protection
SoFi provides personal loans that can be used for home improvements, offering high loan amounts and flexible terms.
Pros:
- Loans up to $100,000
- No origination fees or prepayment penalties
- Unemployment protection program
- Member benefits like career coaching
Cons
- Higher credit score requirements
- Longer funding time compared to some competitors
3. Prosper: Best Peer-to-Peer Lending Option
Prosper connects borrowers with individual lenders through a peer-to-peer lending platform.
Pros:
- Competitive rates for borrowers with good credit
- Joint application option available
- Choose between 3 or 5-year terms
- No prepayment penalties
Cons
- Origination fee of 2.4% to 5%
- Funding can take up to 5 business days
How to Choose the Right Home Improvement Loan
When selecting a home improvement loan, consider these factors:
- Interest rates: Compare APRs to find the most affordable option.
- Loan terms: Look for flexible repayment periods that fit your budget.
- Fees: Watch out for origination fees, late payment fees, and prepayment penalties.
- Loan amounts: Ensure the lender offers enough to cover your project costs.
- Funding speed: If you need money quickly, prioritize lenders with fast approval and disbursement.
Further Reading: What is APR?
Preparing for Your Home Improvement Loan Application
Before you start applying for home improvement loans, taking some preparatory steps can increase your chances of approval and potentially secure better terms. Here’s what you should do:
Steps
Check and Improve Your Credit Score
- Request free credit reports from the major bureaus
- Review for errors and dispute any inaccuracies
- Pay down existing debts to lower your credit utilization
- Make all payments on time to boost your score
Gather Necessary Documentation
- Recent pay stubs (usually last 2-3 months)
- W-2 forms and tax returns from the past two years
- Bank statements
- Proof of other income sources (if applicable)
- List of current debts and assets
Estimate Project Costs Accurately
- Get detailed quotes from multiple contractors
- Factor in costs for permits and inspections
- Add a 10-20% buffer for unexpected expenses
- Include costs for temporary housing if necessary
Calculate Your Debt-to-Income Ratio (DTI)
- Add up all monthly debt payments
- Divide by your gross monthly income
- Aim for a DTI below 43%, as many lenders prefer this or lower
Research Lenders and Loan Options
- Compare rates, terms, and fees from multiple lenders
- Consider both traditional banks and online lenders
- Look into specialized home improvement loan programs
Further Reading: How to Get a Personal Loan
Alternatives to Home Improvement Loans
While personal loans are a popular choice for home improvements, they’re not the only option. Consider these alternatives:
- Credit cards with 0% APR Introductory Offers
- Unsecured personal loans, no collateral required, based on creditworthiness.
- Home equity loans, borrow against your home’s equity with fixed rates.
- Home equity lines of credit (HELOCs), revolving credit lines secured by your home.
- Cash-out refinance, refinance your mortgage for more than you owe and use the difference.
- FHA 203(k) rehabilitation loans, government-backed loans for purchasing and renovating homes.
- Local and state home improvement programs
- Contractor financing
- Save and pay cash
Further Reading: Home Equity Loan vs HELOC
FAQs About Home Improvement Loans
Can I get a home improvement loan with bad credit?
While it’s more challenging, some lenders offer options for borrowers with lower credit scores. You may face higher interest rates or need to secure the loan with collateral.
How much can I borrow for home improvements?
Loan amounts vary by lender and your financial situation. Many lenders offer up to $100,000 for qualified borrowers.
Are home improvement loans tax-deductible?
Interest on home improvement loans may be tax-deductible if the loan is secured by your home and the improvements substantially increase its value. Consult a tax professional for advice.
How long does it take to get approved for a home improvement loan?
Approval times vary, but many online lenders offer decisions within minutes and funding within a few business days.
Can I use a home improvement loan for any project?
Most lenders allow you to use the funds for various home improvement projects. However, some may have restrictions on certain types of renovations.
How to save $619.00 on your loan
The price difference for a $500.00 loan in 90 days is $619.00.
Final Thoughts
Choosing the right home improvement loan can make a significant difference in your renovation journey. Whether you opt for LightStream’s low rates or SoFi’s high loan amounts, be sure to compare multiple options before making a decision. With the right financing in place, you’ll be well on your way to creating the home of your dreams in 2024.
Further Reading: How to Pay for Home Improvements
