Quick answer
A home improvement loan is any loan used to pay for repairs or upgrades. The main choices are an unsecured personal loan, which funds quickly without using your home as collateral, and a home equity loan or HELOC, which may cost less but puts your home on the line. Contractor financing is a third option to compare.
Whether you are fixing a leaking roof or finally redoing the kitchen, how you pay matters almost as much as what you build. Here are the main ways to finance a project and how to choose.
Your main options
| Option | Secured by your home? | Typical structure | Best for |
|---|---|---|---|
| Unsecured personal loan | No | Fixed rate, fixed payment, set term | Small to mid-size projects, urgent repairs, little equity |
| Home equity loan | Yes | Lump sum, usually fixed rate | Large projects with plenty of equity |
| HELOC | Yes | Revolving line, often variable rate | Projects paid in stages |
| Contractor or store financing | Varies | Promos, deferred interest or installment plans | When the promo is truly cheaper and you can pay on time |
| Savings | No | No interest | Anything you can afford to wait for |
The CFPB describes home equity loans and HELOCs as borrowing against your home. That often brings lower rates, but missed payments can put the home at risk. Compare them side by side in HELOC vs personal loan.
What a personal loan costs
Here is what borrowing $15,000 over 60 months costs at three APRs across the 5.99% to 35.99% range offered on our network.
| APR | Monthly payment | Total interest | Total repaid |
|---|---|---|---|
| 5.99% | $289.92 | about $2,395 | about $17,395 |
| 15.99% | $364.69 | about $6,881 | about $21,881 |
| 35.99% | $541.90 | about $17,514 | about $32,514 |
The APR you are offered is the biggest factor. At 35.99%, interest on this project is about $17,514, more than seven times the roughly $2,395 at 5.99%. On a large project it pays to check your credit and compare offers carefully. Try other amounts in the loan payment calculator.
When a personal loan makes sense
- Urgent repairs like a failed water heater or storm damage, where speed matters.
- Projects under roughly the size of your savings plus a short loan, where closing costs on home equity would eat into the savings.
- Little or no equity, such as a recent purchase.
- You do not want to risk your home on a renovation.
Watch out for
- Deferred-interest promotions. The CFPB explains that with deferred interest, if you do not pay the full balance by the deadline, you can owe interest back to the purchase date.
- Paying contractors in full upfront. Pay in stages tied to finished work.
- Over-improving. Not every upgrade adds resale value. Fix what you need first.
Project guides
See our guides to HVAC financing, roof financing, pool loans and appliance financing.
If a fixed-rate installment loan is the right tool, use the form on this page to see whether partner lenders may have an offer, or call (800) 236-7761. You can also compare costs first with the loan payment calculator.
Examples are illustrations, not offers. Approval, APR and terms depend on the lender, your state and your credit profile.
Frequently asked questions about home improvement loans: personal loan vs home equity
Is a personal loan good for home improvements?
It can be for small and mid-size projects, urgent repairs, or if you have little home equity. It does not use your home as collateral and has a fixed payment. For large projects, compare it with a home equity loan.
What credit score do I need for a home improvement loan?
Lenders set their own standards. Higher scores usually get lower APRs. Some lenders work with fair or poor credit at higher rates.
Should I use contractor financing?
Compare it like any loan, using APR and total cost. Watch for promotional or deferred-interest deals that charge back interest if the balance is not paid in time.
Can I deduct interest on a home improvement loan?
Interest on unsecured personal loans is generally not deductible. Rules for home equity debt are different; ask a tax professional about your situation.
Sources
- CFPB: What is a home equity loan? (accessed 2026-10-09)
- CFPB: What is a home equity line of credit (HELOC)? (accessed 2026-10-09)
- CFPB: What is the difference between a loan interest rate and the APR? (accessed 2026-10-09)
- CFPB: I got a credit card promising no interest for a purchase if I pay in full within 12 months. How does this work? (accessed 2026-10-09)
Last updated 2026-10-09. How we research and update pages.