Home Improvement Loan Options

As of April 2026 home values continue to rise nationally. Many homeowners have built-up equity in their homes they can use for repairs or improvements. Even if you don’t have equity in your home you can still fund improvements with a home improvement loan.

With interest rates falling now may be a good time to do those upgrades or repairs. Before dipping into your savings or maxing out your credit cards take a look at our home improvement options .

Our guide will show you how to borrow from your home and other options to cover the cost of your home improvements. We help you learn the types of loans available, what a lender may look for in your finances and how to determine which loan is right for you.

Types of home improvement loans

Financing a loan may seem daunting but with the right facts you can tap into your homes value and borrow with or without using collateral. Obtaining a secure loan will get you better rates and terms then an unsecure loan.

Using your home as collateral removes some of the risk to the lender and they will offer better rates. So with that in mind let’s take a look at some of the secure loans available to you.

Home equity loans and home equity lines of credit explained

Using your home as collateral you can take out a home equity loan or (HEL) which provides a lump sum payment to you. You pay this loan back at a fixed rate of interest with up to 30 year terms. The interest rate for this type of loan is around 8.5% depending on your credit score.

Another secured home improvement loan is called a HELOC a home equity line of credit. This type of loan works like a credit card. You are assigned a line of credit that can be drawn on for up to 10 years.

You only pay interest on what you use and rates start at around 8.5% variable tied to the prime rate. Your interest rate can rise or fall with this type of a loan.

If you only have a one time project like replacing all your windows then a home equity line is a good choice since it has a fixed rate and payment. If you intend to have on-going projects then a HELOC may be better as you only pay for interest on what you use.

Rates for a HELOC can increase a lot if the prime rate rises frequently increasing your payments.

Refinancing a mortgage and cashing out equity

If you have equity in your home a cash-out refinance can give you the money you need for repairs or improvements. This is a good way to take advantage of lower interest rates.

Keep in mind there is a limit on the amount you can cash-out limited to 80% of your homes value. For example if your home is worth $200,000 and you owe $100,000 you could refinance for $180,000 then Cash-out as much as $80,000 not including fees which can be as much as 5% of the loan.

There can be tax advantages if using the money for home improvement and repairs. Always check with a tax professional before taking out a large loan.

Small project personal loans for home improvements

Unsecured personal loans are handled differently then secured loans. They are approved based on your credit and income alone. Interest rates for personal loans are much higher since no collateral is involved.l

Rates can be as high as 39% for people with a low FICO score. This means higher payments too. Typically these type of loans are reserved for small projects like painting or landscaping under $15,000 with terms up to 5 years. You can have lenders compete for your business on sites such as Lending Tree.

FHA Federal Housing Administration home improvement loans

The federal government offers FHA Title 1 loans geared towards home upgrades for people who can’t qualify for other loans. The amounts offered have limits based on the type of home or property you own.

The requirements include regular employment, and fair credit. These loans are offered by most banks and cover things like roof repairs or air conditioning and heating system upgrades.

The rates for an FHA loan range from 7% to 8% and the time you get to pay the loan back extends to up to 20 years.