Best Home Improvement Loans for August 2026

You have a project in mind, such as a kitchen overhaul, a roof replacement, or an HVAC upgrade. You need to fund it. A personal loan gets you there without touching your home equity, generally with fixed payments every month and no collateral required. You could have the funds in a matter of days.

Personal loan rates tend to run higher than home equity loan options. But the application process could be much faster, and you don’t need to use your home as collateral.

You have options. Let’s sort them out.

What is a home improvement loan?

A home improvement loan is a loan used to pay for home repairs, renovations, or upgrades. With many lenders, a home improvement loan is an unsecured personal loan that doesn’t use your home as collateral. This means even if you miss payments, your house isn’t at risk.

Here’s how it typically works: You borrow a lump sum at a fixed interest rate. You repay it in equal monthly payments. You finish paying back your loan at the end of the term, which you and the lender agree on upfront.

Loan amounts vary, with some lenders offering up to $100,000 or more. What you may be eligible for depends on several factors, including your credit score, income, and the lender. Repayment terms also vary by lender. One to seven years is a common range, but there are lenders that offer longer terms.

How to choose the right home improvement loan

Here are the main things to look at so you can choose the right loan.

Here’s what each factor means in practice:

APR includes interest and other loan fees. APR (annual percentage rate) is the full yearly cost of the loan, which is usually more than just the interest rate. Some lenders charge other fees, such as an origination fee, a percentage deducted from your loan upfront. A $20,000 loan with a 5% origination fee means you receive $19,000 but owe $20,000. Always compare APR across lenders so fees are already baked in.

Size the loan to your project. Get a cost estimate before you apply. Borrowing more than you need could mean paying interest on money you didn’t use.

Term trade-off. A shorter term means a higher monthly payment and less total interest. A longer term means a lower monthly payment and more interest over time. Neither is wrong; it depends on your monthly budget.

Pre-qualification. Many lenders let you check your estimated rate with a soft credit pull and no impact on your credit score. Pre-qualify with at least three lenders before you commit, as offers could vary significantly.

Funding speed. If you need the money fast, check whether the lender funds same-day or next-day.

Co-signer or co-borrower. Some lenders allow you to add a co-signer or co-borrower with stronger credit. This may improve your approval odds and the rate you’re offered, though not all lenders allow this option.

Home improvement loan rates: what to expect

Rates on home improvement loans typically range from about 6% to 36%. Where you land depends largely on your credit score. Other factors, including your debt-to-income ratio, loan amount, term, and the lender, can also impact your loan rate.

Borrowers with high credit scores (generally about 720 or above) may be eligible for rates toward the lower end. They may also qualify for lower or no origination fees (an upfront fee to issue a loan). Borrowers with fair or poor credit typically see higher rates and origination fees.

The same borrower can get meaningfully different rates from different lenders. Pre-qualifying with multiple lenders before applying is worth the extra step. It costs nothing and shouldn’t affect your credit score (confirm with each lender).

Home improvement loans for bad credit

If your credit score is below 620, lenders generally consider you a higher-risk borrower. But that doesn’t mean you’re out of options.

Some lenders, particularly online lenders using alternative underwriting models, take a closer look at factors beyond your credit score, such as your income and employment status. These lenders may work with lower scores, though you should expect higher rates and origination fees in exchange.

You could also look for lenders that let you apply with a co-signer or co-borrower who has stronger credit. This could help you get approved for a personal loan with bad credit, and secure a lower rate.

Watch origination fees closely at this credit tier. A high fee can significantly cut into the amount of money you receive when you borrow. Make sure you’re comparing APR, not just the rate.

Personal loan vs. home equity loan for home improvements

If you have enough equity, you may qualify for a home equity loan. Here are the key differences between personal loans and home equity loans for home improvements.

Collateral. A personal loan is usually unsecured. Your home isn’t at risk. A home equity loan uses your home as collateral. If you can’t repay the loan, the lender could foreclose.

Rates. Home equity loans typically have lower rates than personal loans because your home is the lender’s financial safety net. The claim on your home reduces their risk.

Speed. A personal loan is typically funded within a few days. A home equity loan typically takes a couple of weeks or more. That’s because most lenders require an appraisal, and underwriting is usually more involved.

Tax deductibility. Home equity loan interest may be tax deductible if the funds are used to buy, build, or substantially improve your home. Consult a tax advisor for your specific situation. Personal loan interest generally isn’t deductible.

A personal loan may be a better fit if:

• You need funds quickly.
• You don’t have significant home equity.
• You’d rather not put your home at risk.

You may want to go with a home equity loan if:

• You have substantial equity built up.
• Your project is large and the lower rate meaningfully reduces total cost.
• You plan to use the funds for home improvements and could qualify to deduct the interest on your taxes.

How to apply for a home improvement loan

Here’s what to do in order:

1. Get a firm project cost estimate. Borrow what you need, not the maximum you may be eligible for. A contractor quote or detailed estimate is the right starting point.
2. Check your credit score and DTI. Know where you stand before you apply. This allows you to target lenders whose approval range matches your profile.
3. Pre-qualify with at least three lenders. Ensure that each lender’s pre-qualification tool only performs a soft credit pull and doesn’t impact your credit. Compare APR, not just the interest rate.
4. Gather your documents. Lenders normally ask for W-2s or recent tax returns, pay stubs, and proof of address.
5. Submit a formal application. The lender usually runs a hard credit check when you apply for a personal loan, which may have a small temporary impact on your credit score.
6. Review your terms before signing. Check for origination fees, prepayment penalties, and the funding timeline.

For more on the application process, see our guide on how to get a personal loan.

Bills Action Plan

1. Figure out how much you need to borrow. Get a cost estimate for your project so that you don’t borrow more than necessary.
2. Evaluate your loan options. If you have enough home equity, consider whether a home equity loan could make more sense, as rates are often meaningfully lower.
3. Pre-qualify and compare lenders. Once you’ve found a loan offer you like, fill out your application.

Key Terms

APR (Annual Percentage Rate): The full yearly cost of a loan, expressed as a percentage. Unlike the interest rate alone, APR includes fees such as origination charges.

Origination fee: A one-time charge by some lenders to process your loan, typically expressed as a percentage of the loan amount. Deducted from your loan proceeds upfront. A $20,000 loan with a 5% origination fee means you receive $19,000 but owe $20,000.

Soft credit pull: A credit check that doesn’t affect your credit score. Most lenders use a soft pull for pre-qualification so you can see estimated rates and terms before formally applying.

Hard credit pull: A credit check that affects your credit score. Formal credit applications, including loan applications, normally trigger a hard credit check.

Debt-to-income ratio (DTI): Your total monthly debt payments divided by your gross monthly income, expressed as a percentage. Lenders use DTI to assess your ability to repay.

Unsecured loan: A loan not backed by collateral. Home improvement personal loans are typically unsecured. Your home isn’t at risk if you miss payments, though your credit score may be affected.

Pre-qualification: A preliminary review by a lender that uses a soft credit pull to estimate what loan amount and rate you may be eligible for. Pre-qualifying with multiple lenders before applying lets you compare offers without affecting your credit.

This article is for general educational purposes. Bills.com is not a lender. Loan terms, rates, and eligibility depend on your individual circumstances and the lender. Consult a financial advisor for guidance specific to your situation.