8 ways to use a personal loan for a home makeover

By Rebecca Lake

Reviewed by Jill Cornfield

Jun 24, 2024

Read time: 4 min

Young couple, sitting on the floor looking at a paint color swatch, while planning a renovation in their new apartment

Key takeaways:

  • Home improvement loans let you borrow money to make repairs or renovations.

  • You could use a personal loan to remodel your home, replace appliances, or make structural improvements. 

  • It’s good to shop around to find the best home improvement loan rates.

Making updates around the house can make your home more livable—and some renovations may add value. Whether you're savoring the thought of having a professional-grade kitchen or need to replace the roof, home improvement loans could make it happen. 

If you're wondering how to use a personal loan to fund a home makeover, here are a few ideas that might inspire you. 

1. Remodel and renovate

Remodeling and renovation mean taking the home you have and turning it into something even better. For example, you could use a home improvement loan to: 

  • Replace your outdated kitchen cabinets with new modern ones, and swap Formica countertops for granite or marble ones. 

  • Upgrade your bathroom sinks, shower, toilet, and tub to create the ultimate spa experience at home. 

  • Finish your attic or basement space with flooring, walls, and electrical fixtures to convert it to a home office. 

Personal loans could give you the money you need to pay for these projects without having to tap into your home equity. Equity is the difference between what you owe on the home and what it's worth. 

2. Make repairs

Being a homeowner often means spending money fixing things. 

Some repairs, like a broken doorknob or loose weather stripping, are low-cost, easy fixes. But others might take a little more time and money to tackle.

Home improvement loans can help you cover repairs if you need to:

  • Repair faulty electrical wiring or an electrical panel box

  • Fix a broken HVAC unit

  • Replace a leaky roof

  • Install new gutters 

If you have multiple repairs to make but your budget is limited, prioritize them in order of urgency. 

3. Increase energy efficiency

Are high utility bills busting your budget each month? Energy-efficient improvements could help you reduce costs. 

Some of the improvements you might fund with a personal loan include:

  • Install solar panels

  • Replace your current water heater with a tankless one

  • Swap out the old insulation in your attic for energy-efficient options

  • Replace appliances with Energy Star models

  • Install an energy-qualified heat pump

  • Trade your windows for energy-friendly replacements

You can't deduct the interest on a personal loan, even if you're using it for home improvements. But the IRS does offer a tax credit for energy-efficient upgrades that's worth up to $3,200, which could help lower your tax bill when it's time to file. 

Pro tip: Consider a free budgeting app to help you track utility bills and other monthly expenses. 

4. Expand your home

Do you feel like you just don't have enough room to maneuver? Home improvement loans could help you cover expansion projects to add square footage to your space.

For example, you could use a personal loan to:

  • Finish an attic or basement space and convert it to an extra bedroom or guest suite. 

  • Take out non-load-bearing walls to create an open floor plan between the kitchen and living room. 

  • Enclose a patio or porch, or build a full addition. 

Remember to check local building laws to find out if you'll need special permits or inspections to increase your home's livable space. 

5. Make structural improvements

As homes age, they may require maintenance that goes beyond basic. 

For example, if your home has a crawl space and you've noticed your floors sag in certain spots, that's a sign you might need to reinforce the joists or install support piers. Or you may need to encapsulate the space and install a dehumidifier to fight off mold growth. 

One of the benefits of personal loans is that you can use them to cover these kinds of improvements so you don't have to drain your savings to pay for them. 

6. Upgrade appliances and fixtures

If your appliances are nearing the end of their lifespan or you're ready to change up your style, a personal loan could help you outfit your home with new ones. 

You could use a home improvement loan to:

  • Purchase a new fridge, range, dishwasher, and microwave.

  • Get a top-of-the-line washer-and-dryer unit.

  • Replace a leaking water heater.

  • Trade out old, wobbly ceiling fans for new ones.

  • Replace lighting fixtures throughout the home.

Using a personal loan for large purchases like appliances could be a better choice than store financing, which may carry higher interest rates. 

7. Accessibility updates

Personal loans could help you make your home more accessible for people with disabilities or other conditions that affect mobility. 

For example, say your aging parent needs to move in with you and they require a wheelchair. You might use a home improvement loan to construct a ramp or add a chair lift so they're able to access the second floor. 

Other accessibility improvements include smoothing out floors to reduce trip hazards, and widening halls and doorways. A bathroom upgrade may be necessary if you need to install a chair-height toilet, handrails, or grab bars. 

8. Outside improvements

So far, we've focused on ways to make over your home from the inside. But you can use a personal loan for a lot of projects to improve the exterior as well. 

You might invest in:

  • New patio pavers

  • Shrubbery and sod

  • A pool or hot tub

  • Fountains or fish ponds

  • Irrigation systems

  • Driveway resurfacing

  • Fresh paint and new shutters

  • New gutters

  • A new porch or deck

These kinds of improvements can add curb appeal to your home, which could make it easier to sell if you're planning a move down the line. 

Home improvement loans offer plenty of flexibility, since you can decide how to use them to spruce up your space. If you're ready to flex your DIY skills (or start shopping for contractors), take the next step to compare personal loan rates and get pre approved.

Rebecca Lake - Author

Rebecca is a senior contributing writer and debt expert. She's a Certified Educator in Personal Finance and a banking expert for Forbes Advisor. In addition to writing for online publications, Rebecca owns a personal finance website dedicated to teaching women how to take control of their money.

Jill Cornfield

Jill is a personal finance editor at Achieve. For more than 10 years, she has been writing and editing helpful content on everything that touches a person’s finances, from Medicare to retirement plan rollovers to creating a spending budget.

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