Whether you want to renovate a recently purchased house or your home is overdue for some improvements, you’ll want to ensure you have the financial means to take on such a project.
Home improvement costs can vary depending on what part of the home you’re fixing, but according to Rocket Mortgage, Americans spent an average of $22,000 on a single home improvement project in 2023.
A personal loan can help you float the cost of an expensive home improvement project, especially since they’re paid back in small, fixed increments over a set period.
CNBC Select rounded up six of the best personal loan lenders to consider if you need to finance a home improvement project based on factors like interest rates, fees, loan terms, plus other features including how funds are distributed, autopay discounts and customer service. (Read more about our methodology below.)
Best for borrowing larger amounts
LightStream Personal Loans
-
Annual Percentage Rate (APR)
6.99% – 25.49%* APR with AutoPay
-
Loan purpose
Debt consolidation, home improvement, auto financing, medical expenses, and others
-
Loan amounts
-
Terms
24 to 240 months* dependent on loan purpose
-
Credit needed
-
Origination fee
-
Early payoff penalty
-
Late fee
Terms apply. *AutoPay discount is only available prior to loan funding. Rates without AutoPay are 0.50% points higher. Excellent credit required for lowest rate. Rates vary by loan purpose.
Pros
- Same-day funding available through ACH or wire transfer (conditions apply)
- Loan amounts up to $100,000
- No origination fees, no early payoff fees, no late fees
- LightStream plants a tree for every loan
Cons
- Requires several years of credit history
- No option to pay your creditors directly
- Not available for student loans or business loans
- No option for pre-approval on website (but pre-qualification is available on some third-party lending platforms)
Who’s this for? LightStream offers loans with some of the highest borrowing amounts ranging from $5,000 to $100,000. This lender also provides loans for nearly every purpose except for higher education and small business. In other words, home improvements are fair game for the use of these funds.
Standout benefits: LightStream offers the longest-term option among the lenders on this list, which typically means lower monthly payments and less pressure when repaying debt. On the flip side, a longer term also means you’ll accrue more interest charges over the long run.
[ Jump to more details ]
Best for borrowing smaller amounts
PenFed Personal Loans
-
Annual Percentage Rate (APR)
-
Loan purpose
Debt consolidation, home improvement, medical expenses, auto financing and more
-
Loan amounts
-
Terms
-
Credit needed
-
Origination fee
-
Early payoff penalty
-
Late fee
Pros
- Credit union membership available to anyone
- Loans as low as $600
- Can pick up a physical at a branch
- May apply with a co-borrower
Cons
- Funds come as a physical check
- Must be a member to get funds (no membership needed to apply)
- Must pay for expedited shipping to get your funds next day
- Maximum loan amount of $50,000
- Late fee of $29
Who’s this for? PenFed offers loans of as little as $600, making it ideal for those who may not necessarily need a massive home improvement undertaking but need a little extra cash for a smaller fix.
Standout benefits: PenFed primarily provides its funds in the form of a paper check. If you live near a PenFed location, you can pick up your check directly from the bank. With a personal loan, though, you also have the option to have funds deposited into your PenFed savings or checking account or transferred to you via ACH transfer, according to the lender’s website.
[ Jump to more details ]
Best for lower credit scores
Upstart Personal Loans
-
Annual Percentage Rate (APR)
-
Loan purpose
Debt consolidation, credit card refinancing, wedding, moving or medical
-
Loan amounts
-
Terms
-
Credit needed
Credit score of 300 on at least one credit report (but will accept applicants whose credit history is so insufficient they don’t have a credit score)
-
Origination fee
0% to 12% of the target amount
-
Early payoff penalty
-
Late fee
The greater of 5% of last amount due or $15, whichever is greater
Pros
- Open to borrowers with fair credit (minimum 300 score)
- Will accept applicants who have insufficient credit history and don’t have a credit score
- No early payoff fees
- 99% of personal loan funds are sent the next business day after completing required paperwork before 5 p.m. Monday through Friday
Cons
- High late fees
- Origination fee of 0% to 10% of the target amount (automatically withheld from the loan before it’s delivered to you)
- $10 fee to request paper copies of loan agreement (no fee for eSigned virtual copies)
- Must have a Social Security number
Who’s this for? If you need to make home improvements but worry that a low credit score would disqualify you from many loans, the good news is that Upstart offers you an option for funding. This lender is ideal for individuals with a low credit score or even no credit history. It considers factors like education, employment, credit history and work experience.
Standout benefits: Borrowers can apply for as little as $1,000, making Upstart another fairly strong contender for those who may only need to borrow a small amount of money.
[ Jump to more details ]
Best for long repayment terms
SoFi Personal Loans
-
Annual Percentage Rate (APR)
8.99% – 29.49% when you sign up for autopay
-
Loan purpose
Debt consolidation/refinancing, home improvement, relocation assistance or medical expenses
-
Loan amounts
-
Terms
-
Credit needed
-
Origination fee
-
Early payoff penalty
-
Late fee
Pros
- No origination fees required, no early payoff fees, no late fees
- Unemployment protection if you lose your job
- DACA recipients can apply with a creditworthy co-borrower who is a U.S. citizen/permanent resident by calling 877-936-2269
- Can have more than one SoFi loan at a time (state-permitting)
- May accept offer of employment (to start within the next 90 days) as proof of income
- Co-applicants may apply
Cons
- Applicants who are U.S. visa holders must have more than two years remaining on visa to be eligible
- No co-signers allowed (co-applicants only)
Fixed rates from 8.99% APR to 29.49% APR reflect the 0.25% autopay interest rate discount and a 0.25% direct deposit interest rate discount. SoFi rate ranges are current as of 02/06/2024 and are subject to change without notice. The average of SoFi Personal Loans funded in 2022 was around $30K. Not all applicants qualify for the lowest rate. Lowest rates reserved for the most creditworthy borrowers. Your actual rate will be within the range of rates listed and will depend on the term you select, evaluation of your creditworthiness, income, and a variety of other factors.
Who’s this for? SoFi offers repayment terms that are longer compared to those of most other lenders: Borrowers have 24 to 84 months to pay back the loan. This can be ideal for borrowers who favor smaller monthly payments over a longer repayment term.
Standout benefits: SoFi offers personal loan amounts up to $100,000, making it ideal for those who have more costly, higher-lift home improvement projects to take on.
[ Jump to more details ]
Best for fast funding
Discover Personal Loans
-
Annual Percentage Rate (APR)
-
Loan purpose
Debt consolidation, home improvement, wedding or vacation
-
Loan amounts
-
Terms
36, 48, 60, 72 and 84 months
-
Credit needed
-
Origination fee
-
Early payoff penalty
-
Late fee
Pros
- No origination fees, no early payoff fees
- Same-day decision (in most cases)
- Option to pay creditors directly
- 7 different payment options from mailing a check to pay by phone or app
Cons
- Late fee of $39
- No autopay discount
- No cosigners or joint applications
Who’s this for? Discover® Personal Loans is ideal for those who need funding in a pinch for a home renovation that’s more of an emergency since borrowers can receive their funds as early as the next business day. Of course, to get your funds quickly, you must submit an application that is complete and doesn’t contain errors (you’ll also want to make sure the loan is funded on a weekday).
Standout benefits: Discover® doesn’t charge an origination fee for its personal loans.
[ Jump to more details ]
Best for Citi customers
Citi® Personal Loan
-
Annual Percentage Rate (APR)
11.49% – 20.49% APR (0.5% APR discount when you sign up for autopay)
-
Loan purpose
Debt consolidation, home improvement, relocation and more
-
Loan amounts
-
Terms
-
Credit needed
-
Origination fee
-
Early payoff penalty
-
Late fee
Pros
- No origination fee, early payoff fee or late fee
- Fixed rate APR
- Generous 0.5% interest rate reduction for enrolling in autopay
- Can receive your funds as soon as the same business day if you have a Citi deposit account
Cons
- Co-applicants are not allowed
Who’s this for? Existing Citi® deposit account customers can receive their loan funding as quickly as the same business day since the funds can be deposited directly into their accounts. This allows you to start your home improvement project as soon as possible. If you don’t have an existing Citi deposit account, it can take up to two business days to receive the funds.
Standout benefits: Citi offers a 0.50% rate reduction for borrowers who enroll in autopay. This is a fairly generous discount since many other lenders only offer a 0.25% interest rate reduction for enrolling in autopay.
[ Jump to more details ]
Compare offers to find the best loan
More on our top picks for best home improvement loans
LightStream
Eligible borrowers
Good to excellent credit needed
Loan amounts
$5,000 to $100,000
Loan terms
24 to 144 months
[ Return to account summary ]
PenFed
Eligible borrowers
While it’s not required to be a PenFed member to apply, a membership will be created for you if you decide to accept the loan.
Loan amounts
$600 to $50,000
Loan terms
1 to 5 years
[ Return to account summary ]
Upstart
Eligible borrowers
A credit score of 300 is needed on at least one credit report, but Upstart also considers borrowers with insufficient credit history
Loan amounts
$1,000 to $50,000
Loan terms
36 and 60 months
[ Return to account summary ]
SoFi
SoFi also provides a 0.25% discount on your APR if you set up automatic electronic monthly payments.
Eligible borrowers
Must reside in a state where SoFi is authorized to lend and must be employed, have sufficient income from other sources, or have an offer of employment to start within the next 90 days.
Loan amounts
$5,000 to $100,000
Loan terms
24 to 84 months
[ Return to account summary ]
Discover®
Eligible borrowers
Must have a minimum individual or household annual income of $25,000
Loan amounts
$2,500 to $40,000
Loan terms
36, 48, 60, 72 and 84 months
[ Return to account summary ]
Citi® Bank
Eligible borrowers
Must be at least 18 years old
Loan amounts
$2,000 to $30,000
Loan terms
Up to 60 months
[ Return to account summary ]
What are some common personal loan definitions I should know?
Here are some common personal loan terms you need to know before applying.
- Co-applicants or joint applications: A co-applicant is a broad term for another person who helps you qualify by attaching their name (and financial details) to your application. A co-applicant can be a co-signer or a co-borrower. Having a co-applicant can be helpful when your credit score isn’t so great, or if you’re a young borrower who doesn’t have much credit history. If your co-applicant has a good credit score, you might be offered better terms, including qualifying for a lower APR and/or a bigger loan. At the same time, both applicants’ credit scores will be affected if you don’t pay back your loan, so be sure that your co-applicant is someone you feel comfortable sharing financial responsibility with.
- Co-signers: A co-signer agrees to help you qualify for the loan, but they are only responsible for making payments if you are unable to. The co-signer does not receive the loan, nor do they necessarily make decisions about how it is used. However, the co-signers credit will be negatively affected if the main borrower misses payments or defaults.
- Co-borrower: Unlike a co-signer, a co-borrower is responsible for paying back the loan and deciding how it is used. Co-borrowers are usually involved in decisions about how the loan is used. Some lenders will only consider two co-borrowers who share a home or business address, as this is a firm indicator that they are sharing the responsibility of money in mutually beneficial ways. Both co-borrowers’ credit scores are on the hook if either one stops making payments or defaults.
- Direct payments: Some lenders offer direct payments when you select debt consolidation as the reason for taking out a personal loan. With direct payments, the lender pays your creditors directly, and then deposits any leftover funds into your checking or savings account. Until you see your account balance is fully paid off, it’s best to keep making payments so that you don’t get hit with additional late fees and interest charges.
- Early payoff penalty: Before you accept a loan, look to see if the lender charges an early payoff or prepayment penalty. Because lenders expect to get paid interest for the full term of your loan, they could charge you a fee if you make extra payments to pay your debt down quicker. The fees could equal either the remaining interest you would have owed, a percentage of your payoff balance or a flat rate.
- Origination fee: An origination fee is a one-time upfront charge that your lender subtracts from your loan to pay for administration and processing costs. It is usually between 1% and 5%, but sometimes it is charged as a flat-rate fee. For example, if you took out a loan for $20,000 and there was a 5% origination fee, you would only receive $19,000 when you got your funds. Your lender would get $1,000 of the loan off the top, and you’d still have to pay back the full $20,000 plus interest. It’s best to avoid origination fees if possible. Having a good to excellent credit score helps you qualify for loans that don’t have origination or administration fees.
- Unsecured versus secured loans: Most personal loans are unsecured, meaning they are not tied to collateral. However, if your credit score is less-than-stellar and you’re finding it hard to qualify for the best loans, you can sometimes use a car, house or other assets to act as collateral in case you default on your payments. When you put an asset up as collateral, you are giving your lender permission to repossess it if you don’t pay back your debts on time and in full.
FAQs
How do home improvement personal loans work?
A home improvement personal loan is a personal loan that a borrower uses for some type of home renovation project or emergency fix. Personal loans are a form of installment credit that can be a more affordable way to finance the big expenses in your life. In addition to home improvements, you can use a personal loan for wedding expenses, debt consolidation, funeral expenses, travel and more.
Because personal loans are a form of installment credit, borrowers repay the balance in fixed, equal amounts over a set period of time. This period is known as the loan’s term. Most loan terms range anywhere from six months to seven years. The longer the term, the lower your monthly payments will be, but this also usually means you’ll pay more in interest charges over the duration of your loan. It’s usually best to choose the shortest term that you can afford.
Once approved for your home improvement personal loan, the cash is usually delivered directly to your checking account. When paying back the loan, be aware of any late fees or early payoff penalties. Your monthly payment will include interest. When your loan is paid off, the credit line is closed and you no longer have access to it.
How big of a home improvement loan can I get?
Lenders offer the ability to choose from a wide range of loan amounts, starting from $600 and going up to $100,000. However, before you apply, you should consider how much of a loan you can reasonably afford. Avoid taking on a loan that you cannot afford to pay back since you’ll also be responsible for interest charges and any additional fees should you make a late payment or miss a payment.
How is my home improvement loan rate decided?
Your interest rate is typically based on your credit score, credit history and income, as well as factors like how much of a loan you’re applying for and the loan term. Generally, loans with longer terms have higher interest rates since lenders are giving you a longer runway to pay the balance back in full.
Are personal loans secured or unsecured?
Most personal loans are typically unsecured but some lenders may offer options to secure your loan. Be sure to check the loan terms with your desired lender.
Bottom line
A home renovation can be a tremendous financial undertaking, which is why choosing the personal loan that’s right for you can make you feel a little less financially strained. Features like term length, funding timeline and fees are all points to take note of when weighing lenders.
Subscribe to the CNBC Select Newsletter!
Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every personal loan review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best home improvement loans.
Catch up on CNBC Select’s in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.
Our methodology
To determine which personal loans are the best for home improvements, CNBC Select analyzed dozens of U.S. personal loans offered by both online and brick-and-mortar banks, including large credit unions, that come with no origination or signup fees, fixed-rate APRs and flexible loan amounts and terms to suit an array of financing needs.
When narrowing down and ranking the best personal loans, we focused on the following features:
- No origination or signup fee: None of the lenders on our best-of list charge borrowers an upfront fee for processing your loan.
- Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan’s term, which means your monthly payment won’t vary, making your budget easier to plan.
- Flexible minimum and maximum loan amounts/terms: Each lender provides a variety of financing options that you can customize based on your monthly budget and how long you need to pay back your loan.
- No early payoff penalties: The lenders on our list do not charge borrowers for paying off loans early.
- Streamlined application process: We considered whether lenders offered same-day approval decisions and a fast online application process.
- Customer support: Every loan on our list provides customer service available via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
- Fund disbursement: The loans on our list deliver funds promptly through either electronic wire transfer to your checking account or in the form of a paper check. Some lenders (which we noted) offer the ability to pay your creditors directly.
- Autopay discounts: We noted the lenders that reward you for enrolling in autopay by lowering your APR by 0.25% to 0.5%.
- Creditor payment limits and loan sizes: The above lenders provide loans in an array of sizes, from $500 to $100,000. Each lender advertises its respective payment limits and loan sizes, and completing a preapproval process can give you an idea of what your interest rate and monthly payment would be for such an amount.
After reviewing the above features, we sorted our recommendations by best for overall financing needs, debt consolidation and refinancing, small loans and next-day funding.
Note that the rates and fee structures advertised for personal loans are subject to fluctuate per the Fed rate. However, once you accept your loan agreement, a fixed-rate APR will guarantee interest rate and monthly payment will remain consistent throughout the entire term of the loan. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness. To take out a loan, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
link
More Stories
The best home improvements for your dollar
Cash-Out Refinance For Home Improvements
Where Is Heather Dubrow Living Amid Beverly Hills House Renovation?