What Is The Best Loan for Home Improvements?

By Upstart Content Team | Updated March 30, 2026
reading time 6 min read

Quick Answer: If you need fast funding without using your home as collateral, an unsecured personal loan) is typically a better choice. If you have significant home equity and want potentially lower rates, a HELOC may be better.

A home improvement loan is an unsecured personal loan used to finance renovations, repairs, or upgrades to your home. If you have home renovation plans on the horizon but don’t necessarily have the cash in your savings to pay for it in full, there are loan options such as home improvement loans to help you finance the cost of upgrades and maintenance. The type of loan that is best for you depends on your timeline, budget, credit score, and repayment terms that make the most sense for your financial situation. 

Here are the different kinds of home loans that are best for home improvements. 

Comparison of Home Improvement Financing Options

Financing Option Collateral Required Typical APR Range Funding Speed Best Use Case
Home Improvement Loan No 7%–36% As fast as 1 business day Quick funding for defined projects without risking collateral 
HELOC Yes 8%–18% (variable) 2–6 weeks Ongoing projects with flexible borrowing needs
Cash-Out Refinance Yes 6%–12% 30–45 days Large renovations when you can secure a lower mortgage rate
Credit Card No 18%–28% Immediate (existing cards) Small, urgent repairs you can pay off quickly

APR ranges are approximate and vary based on creditworthiness, lender, and market conditions.

1. Home improvement loan

A home improvement loan can be used for home renovations such as a kitchen or bathroom remodel. It can also be used for smaller, but still costly additions, such as energy efficient windows or solar panels. 

Typical eligibility: Credit scores of 580–620+ depending on lender; no home equity required.

Here’s what you should know about home improvement loans:

  • They don’t usually require you to put down collateral, such as your home or car. This is a good thing, in the event that you can’t repay the loan—you won’t lose your house, car, or other assets.
  • Because you don’t have to put down collateral, home improvement loans may come with higher interest rates than secured loans such as a HELOC or home equity lines of credit (which require collateral). Not putting down collateral is viewed as more of a risk for lenders. Your interest rate will depend on your credit score.
  • They typically have fixed APR and monthly payments which means you know exactly what the full cost of your loan is. The predictability in knowing your monthly payments and interest rate can help you budget.
  • Once approved, you can get the funds deposited directly into your bank account—sometimes in as fast as one business day.

2. Home equity line of credit or HELOC

Home equity lines of credit is a loan that works similar to a credit card. Borrowers are loaned a certain amount, pay it down, and may then borrow again—similar to using a credit card and make monthly payments. HELOCs can offer more flexibility because you don’t have to use the entire amount you’re approved for. You only use what you need and the credit line is available for up to 10 years. 

Unlike a credit card, a HELOC is borrowed money from a lender, so you have to pay it back just like you would any other loan. 

Typical eligibility: Credit scores of 680–700+; at least 15 to 20 percent equity in your home required. The amount you qualify for depends on how much home equity you have.

You must have at least 15 to 20 percent equity in your home to be able to go this route. The amount you qualify for depends on how much home equity you have.

Here’s what else you should know about HELOCs:

  • The interest rates are adjustable, which means they can change over the life of the loan. However, the interest is only due on the balance, which is the amount you’ve used, rather than the entire credit line. This could help you save some money over the life of the loan.
  • Because HELOCs are adjustable, the lender can change the terms of the loan. Let’s say your credit score takes a dip for whatever reason, then the lender can reduce the amount you’re allowed to borrow.
  • These loans are a good option if you have smaller renovation projects that are ongoing but aren’t as expensive as a complete overhaul of your home.
  • The set loan terms to repay the loan are usually between five and 20 years.

3. Mortgage refinance

With interest rates being low, refinancing is a popular option for homeowners to save some money on their mortgages. Refinancing frees up extra cash, either through lower monthly mortgage payments or through a cash out refinance in which you’re borrowing against the equity in your home.

When you refinance, your current mortgage is replaced with a new one, with a new interest rate. You essentially gain the difference if the new loan is larger than the old one—this difference can help fund your home improvement. 

Typical eligibility: Credit scores of 620+; sufficient home equity required (typically 20%+ for cash-out refinance).

Here’s what you need to know about refinancing your mortgage: 

  • Refinancing only makes sense if you can secure a lower interest rate.
  • Refinancing may be a better option than a HELOC, as long as you plan to stay in your home for more than five years to offset the cost of fees that you’d pay for the refinance. If you plan on moving before five years or if your current mortgage rate is already low, a HELOC might be better.
  • Since refinancing involves pulling out a brand new loan, the fees of transacting may be high—this includes an appraisal, origination fees, taxes, and other closing costs.
  • If you don’t refinance for a shorter term, you’re essentially extending the life of your loan, making it more costly for you in the long-run.

4. Credit cards

Using a credit card to fund your home improvement projects is another option. 

Unlike the other loans listed, credit cards typically come with higher interest rates. The average credit card interest rate is almost 18 percent for new accounts and 14 percent for existing accounts. Going this route may be expensive, unless you have plans to pay your cards off each month. 

Here’s what you need to know about credit cards:

  • There are zero percent introductory credit cards, which may give you 12 to 20 months to pay back the card without incurring interest. This is a good route, but only if you can pay it off before the promotional timeframe ends.
  • You can earn rewards, miles, and points on your credit cards for big purchases. Being able to grab these rewards from spending on a renovation is great, but only if you have the cash to pay it off each month.
  • There’s no waiting around to get approved if you’re planning on using your existing cards to make purchases. This is useful if you have a timely project that needs to be done—such as a burst pipe.
  • Keep in mind that if you don’t have high limits for your cards, maxing them out or getting close to maxing them out won’t be good for your credit. 

Find the best loan for your home improvement project

  • Home improvement loans offer fast funding (as quick as one business day) without requiring your home as collateral, making them ideal for borrowers who want predictable payments and don’t want to risk their property.
  • HELOCs provide flexible, revolving credit but require significant home equity (15–20%) and come with variable interest rates.
  • Cash-out refinancing can offer lower rates but involves higher closing costs and longer processing times—best for those staying in their home 5+ years.
  • Credit cards should generally be reserved for small, urgent repairs you can pay off quickly to avoid high interest charges.
  • Your credit score, available home equity, project timeline, and risk tolerance should guide your financing decision.

Bottom line

Financing a home improvement project means figuring out which loan is right for your situation and budget. 

The most important thing is having a solid plan that outlines how much the projects will cost and how quickly you can pay off the loan. Securing a lower interest rate is always best, and staying vigilant about your credit score is also important. 

Frequently Asked Questions

What credit score do I need for a home improvement loan?
Most lenders require a minimum credit score of 580–620 for an unsecured home improvement loan, though borrowers with scores of 670+ typically qualify for better rates. Requirements vary by lender.

Is a HELOC or personal loan better for home improvements?
It depends on your situation. A personal loan (home improvement loan) is better if you need fast funding, don’t have significant home equity, or don’t want to use your home as collateral. A HELOC may offer lower rates if you have substantial equity and prefer flexible, revolving credit.

How fast can I get funding for a home improvement loan?
Many lenders can fund unsecured home improvement loans within one to three business days after approval. HELOCs and cash-out refinances typically take several weeks due to appraisal and underwriting requirements.

Can I use a personal loan for any type of home improvement?
Yes, unsecured personal loans can generally be used for any home improvement project, from major renovations like kitchen remodels to smaller upgrades like new appliances or landscaping.

*This content is general in nature and provided for informational purposes only. This content is not specific to Upstart, except where explicitly stated. This content may contain references to products and services offered through Upstart’s credit marketplace. Upstart is not a financial advisor and does not offer financial planning services.

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About the Author

Upstart Content Team

The Upstart Content Team develops educational content grounded in research and real-world financial experiences. By breaking down complex topics into clear, actionable insights, the team helps readers navigate important decisions—so they can feel confident in the money moments that matter.

More resources you may be interested in

How to Get a Home Improvement Loan in 4 Steps
What Can Personal Loans Be Used For?
Installment Loans

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