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A home renovation loan is used for renovations, repairs, or upgrades and is designed to help you make the changes you want without using a credit card or money from savings. It comes in the form of an unsecured personal loan that doesn’t require any collateral, a home equity line of credit (HELOC), or a home equity loan.
The best home renovation loans all fall in the personal loan category. They're offered by banks, online lenders, private lenders, and credit unions. Keep reading to see which of these options is right for you.
Best Overall: SoFi
Why We Chose It: SoFi offers low interest rates, high maximum loan amounts, and you can check to see if you pre-qualify for a home renovation loan without a hard credit inquiry.
Low interest rates
High maximum home renovation loan amounts, up to $100,000
Strong leadership team
Positive user reviews
Funding can take about a week, which is longer than other loans
Strong FICO score needed to qualify
SoFi was started in 2011 by Stanford business school students originally using alumni-funding lending models. It has since funded over $50 billion in loans, has over 1 million customers (who it calls members), and more than $22 billion of members' debt has been paid off.
SoFi offers personal loans which are ideal for home renovation projects from $5,000 to $100,000. A strong FICO score is needed, usually above 680, and the company doesn’t charge any fees. Interest rates typically range from 5.99 percent to 18.28 percent as of December 2020, and loans fund in about a week. Rates can be fixed or variable. The company will temporarily pause your payments if you lose your job.
In addition to home renovation loans, SoFi offers private student loans, small business loans, medical loans, credit card consolidation, and relocation assistance. The entire loan process is completed online and the funds are wired to your account.
Best for Bad Credit: Avant
Why We Chose It: Avant offers home renovation loans to customers who don’t have great FICO scores. It also funds home renovation loans quickly and can pre-qualify you without a hard credit inquiry.
Borrowers with less-than-stellar credit may qualify
Fast funding often as soon as the next business day
No hard credit inquiry for a pre-approval
Lower maximum loan limits
Avant was started in 2012 by a serial entrepreneur as a private financial technology company, and the company's customers have since borrowed more than $6.5 billion. Avant maintains a headquarters in Chicago and focuses on responsible lending practices. Its goal is to lower the costs and barriers of lending for everyday people.
Avant’s personal loans range from $2,000 to $35,000, which makes this company well-suited for small and medium-sized home renovation projects such as doing work on a bathroom or upgrading kitchen appliances. A minimum FICO score of 580 is required, but most customers have at least a 600 credit score. This makes Avant more accessible than most other companies that offer home renovation loans. Rates typically range from 9.95 percent to 35.99 percent, as of December 2020.
Avant’s loan process is done online and your home renovation loan will typically be deposited into your bank account the next business day.
Best for Small Renovations: Marcus by Goldman Sachs
Why We Chose It: Marcus by Goldman Sachs offers home renovation loans starting at $3,500, a good amount for a small home project. It offers fixed rates, no fees, and is backed by a financial powerhouse.
Goldman Sachs is a reputable financial firm
You don’t need a relationship with Goldman Sachs to qualify
Small loan amounts for small home renovations
A strong credit score is needed, but no minimum FICO score is provided
It takes up to five days to receive funds
Investment banking, securities, and investment management firm Goldman Sachs was formed in 1869 and boasts more than 150 years of financial expertise. It is one of the most well-known financial firms in the world, and its client roster includes other financial institutions, corporations, notable individuals, and governments.
Home renovation loan amounts with the firm's Marcus division range from $3,500 to $40,000. All rates are fixed, so you don’t have to worry about your rate fluctuating over time. A strong FICO score is needed, but a minimum score isn’t reported by the company. Loans are typically funded within five days and the application process is done online. Rates vary but are generally between 6.99 percent and 19.99 percent as of December 2020. No fees are charged and customers have access to an app.
Besides home renovation loans, Marcus by Goldman Sachs offers debt consolidation loans and high yield savings accounts. The loan process can be completed entirely online and funds typically land in your bank account within five days.
Best for Veterans: USAA
Why We Chose It: USAA offers small home renovation loans to its members. It also offers so many other products and services including insurance, mortgages, car loans, and retirement accounts. It can be a one-stop shop for veterans.
Long repayment terms up to 84 months
Small maximum loan amount
USAA membership and bank account required
USAA (United Services Automobile Association) is a diversified financial services group and an investing, banking, and insurance industry leader. It’s open to members of the U.S. military, veterans, and their families. The company was founded in 1922 in San Antonio, Texas. It has more than 13 million members but started with only 25 army officers who wanted to insure their cars.
USAA offers home renovation loans to its members with loan amounts ranging from $2,500 to $5,000, which makes it suitable for small and medium-sized renovations but not enough for a large project like a full kitchen renovation. Interest rates are typically between 7.24 percent and 17.65 percent, as of December 2020. A minimum FICO score of 600 is required and USAA doesn’t charge any loan fees.
Loans are funded quickly and you can apply online. The money will be deposited in your USAA bank account within 24 hours of loan approval.
Best Rates: LightStream
Why We Chose It: LightStream offers competitive rates on home renovation loans and has high maximum loan amounts that are ideal for large projects.
High maximum loan amounts
Low interest rates
Fast funding times
Higher interest rate for larger loans
Getting pre-approved requires a hard credit pull
LightStream is an online consumer lending division of Truist, a company created in the 2019 merger of SunTrust Bank and BB&T. LightStream was founded in 2014 as a small startup company and has grown into an innovative online lender that focuses on rewarding borrowers who have a good credit history with an easy loan process.
LightStream offers home improvement loans from $5,000 to $100,000. Rates start at 3.99 percent as of December 2020, and there's a discount for using autopay. Loans over $25,000 start at 5.49 percent. A strong FICO score is needed to qualify, typically at least 680 with several years of positive credit history. LightStream doesn’t charge any loan origination fees. Loans are funded as soon as the day the application is processed.
Everything is done online and the funds are wired to your account.
Best Brick-and-Mortar Location: Wells Fargo
Why We Chose It: Wells Fargo offers borrowers the choice of coming into one of its brick-and-mortar locations and meeting with a loan specialist in person or applying online. The company has been around for over 150 years and offers full banking services in addition to personal loans.
Strong history in the financial industry
Physical locations for customers who like personal attention
One-stop shop for banking, loan, and mortgages
Must be a Wells Fargo customer to apply online or over the phone
Hard credit pull to get pre-approved
More stringent borrower qualifications
Wells Fargo was founded in New York and now has headquarters in San Francisco, along with branches throughout the United States and overseas. It’s the world’s fourth-largest bank and is a publicly traded company. Wells Faro provides loans, banking services, mortgages, investment products, and commercial financial services.
Wells Fargo offers personal loans that can be used for home renovations ranging from $3,000 to $100,000, making it one of the highest loan amounts on our list. Customers with an established personal banking relationship can take advantage of interest rate discounts of 0.25 percent. Otherwise, rates range from 5.74 percent to 24.29 percent as of December 2020. There are no loan-related fees and Wells Fargo considers a customer's FICO score, overall credit history, and debt-to-income ratio when determining loan qualification. Generally, you will need a credit score of 620 or higher.
If you’re a Wells Fargo customer, you can apply for a home renovation loan over the phone or online. However, non-customers will need to apply at one of its branches. More documents are typically required for Wells Fargo's loans than some of the other home renovation loan providers, but your funds will be available as soon as the next business day once approved.
Best for Emergency Home Repairs: Lending Club
Why We Chose It: Lending Club’s minimum loan amount is $1,000, which is ideal if you need to borrow money to fix small issues. It also allows for a co-signer in case you don’t qualify for the loan yourself.
Small loan amounts if you just want to borrow enough to make a repair
Lower minimum credit score than most other loans
Option to add a co-signer
Maximum loan amount won’t be enough for a large renovation
Rates are higher than some other loans
Lending Club was founded in 2006 as an online peer-to-peer lending company. It now offers direct-to-consumer loans that are assigned to other financial institutions.
Lending Club requires a minimum credit score of 600, which is lower than what most other home renovation loans ask for. Loan amounts range from $1,000 to $40,000. Rates vary but are typically between 10.68 percent and 35.89 percent as of December 2020. Pre-qualifying for a loan only requires a soft credit check. Lending Club does charge loan origination fees, which it deducts from the amount of the loan. These fees vary based on the borrower’s qualifications but are generally between 1 percent and 6 percent of the loan amount.
Lending Club conducts business and funds loans entirely online. It doesn’t offer any discounts for auto payments and it does charge late fees. Expect to receive funds in your bank account within seven business days, a longer period than most other home renovation loans.
There are so many options to choose from when it comes to home renovation loans. Consider whether you meet the loan qualifications, how much money your home renovation product requires, and how quickly you need the money. Remember to also review the loan terms, rates, and any applicable fees before making a decision. We reviewed all of the companies and recommend SoFi because we think it offers the best value in home improvement loans with reasonable rates and large loan amounts.
What Is a Home Renovation Loan?
A home renovation loan is a type of loan used to pay for various home repairs, upgrades, renovations, and remodeling. Typically, a home renovation loan comes in the form of an unsecured personal loan, which means no asset is required as collateral. However, a home equity loan and a home equity line of credit can also be home renovation loans. Home renovation loans generally range from $1,000 to $100,000.
When Should You Use a Home Renovation Loan?
You should use a home renovation loan to fund emergency repairs if you don’t have the money available; undertake value-added renovations that will increase the equity in your home; tackle large projects that would exceed your credit card limit; make changes on a new home; and take on a remodeling project such as a bathroom or kitchen.
There are many occasions when a home renovation loan should be used, but there are also times when it’s not the best option. For example, if you only need to do a small repair, you may be better off putting it on your credit card and then paying it off.
How Much Does a Home Renovation Loan Cost?
Home loan renovation costs vary based on the amount you’re borrowing, your interest rate, the type of lender, and your qualifications as a borrower. In general, a higher FICO score will net you a lower interest rate. That rate will likely be anywhere from about 4 percent to 36 percent.
Some lenders charge loan origination fees, late fees, and prepayment penalties, while others don’t charge any fees. It’s always important to find out all of the costs upfront so you can decide if a home renovation loan is right for you.
How We Chose the Best Home Renovation Loans
We researched more than a dozen home renovation loans and reviewed them based on the reputation of the company, the type of loans offered, the terms, and the loan amounts. We also considered approval requirements, costs, and additional services.
For example, SoFi was founded nine years ago and has funded more than $50 billion in loans. It has a strong leadership team and the company doesn’t charge origination fees, late fees, or prepayment penalties. Wells Fargo, on the other hand, operates brick-and-mortar locations nationwide and internationally, making it a good choice for customers who prefer to conduct business in person.