Home improvements with a personal loan

By Miranda Marquit

Reviewed by Keith Osmun

Apr 12, 2023 - Updated May 29, 2023

Read time: 4 min

Two best young female friends are fixing up their new apartment together
  • Personal loans can be used as home improvement loans

  • Personal loans offer fast, flexible funding that you can use to upgrade your home

  • You can apply for a personal loan without pledging your home (or anything else) as collateral

Your home provides security and contentment that’s hard to find elsewhere. Give it some TLC with a home improvement loan. Your home is where you unwind after a long day and spend time with people you love. An immense feeling of satisfaction comes with turning your home into a sanctuary that produces feelings of joy and peace. Sometimes that vision requires money. 

You don’t have to borrow against your home to improve it. You don’t even have to own the home (as long as you’re doing improvements that are allowed). A home improvement loan can help you renovate, upgrade, or repair whatever needs attention or TLC.  

Let's look at how a personal loan can help you improve your living space so you can feel more comfortable at home. 

What is a personal loan for home improvement?

A personal loan for home improvement allows you to borrow money to fix up your home, without pledging something of value to the lender. This is different from other types of loans that require collateral. For instance, to get a home equity loan you pledge the home as a guarantee that you’ll repay the loan. 

Most personal loans are unsecured loans and don't need this type of security. You’ll qualify based on your credit standing, income, and other debts. 

Personal loans tend to range from about $5,000 to $50,000, although you can find them in smaller and larger amounts. 

The repayment period is usually between two and five years (your choice), allowing you to spread a large expense over an amount of time that makes it affordable for you. 

Ways you can use your loan to improve your home

Most personal loans allow for freedom when choosing how to use the money. As a result, it's possible to use your personal loan funds for a variety of projects around the house, including:

  • A kitchen or bathroom remodel

  • Upgrade light fixtures and doors

  • Redo the flooring

  • Transform a room for a new purpose

  • Build a deck or patio

  • Install a sprinkler system

  • Add a fresh coat of paint to the whole house

  • Buy new appliances or furniture

  • Purchase or upgrade electronics or a smart home system

These projects can breathe new life into your living space without the need for you to secure the loan with an asset like your home or your car.

How to get a personal loan

Start by figuring out how much your project will cost. Once you know how much it'll take to make your home improvements, you can provide the information to a loan specialist who can give you your options. 

It’s a good idea to research options with a lender that does a soft pull on your credit to find out what rate you might qualify for. That means the credit check won’t hurt your score. Once you choose a loan, you’ll need to submit a formal application. That will cause a hard pull on your credit, which can cause your score to temporarily drop by a few points.

You'll need to provide proof of your identity and your contact information. The lender might also ask for documentation such as a driver's license, recent pay stubs, or bank statements.

Once all of your information is submitted, the lender will determine whether you qualify. It’s possible to get a decision on the same day you apply, and the loan funds within 24 to 72 hours.

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Benefits of using a personal loan for home renovations

As you weigh whether to use a personal loan for home improvement, consider the following:

  • Fast approval and funding so you can start making updates quickly

  • Flexible repayment terms to meet your needs and make paying for the renovations manageable

  • Home improvements could increase the resale value of your house

  • Money is available for a variety of projects, big, or small

  • No need for collateral

Personal loan risks

Even though personal loans can work as home improvement loans, there are risks to consider:

  • Anytime you apply for credit, it’s likely to impact your credit score 

  • Until you pay down your home improvement loan, it could be harder to borrow money for other purposes

  • Interest rates on unsecured personal loans tend to be a little higher than comparable secured loans (like home equity loans)

3 other ways to pay for home improvements

While a personal loan can be one way to pay for home improvements, it's not the only choice.

  1. Home equity loan: If you have equity, you might be able to borrow against it with a home equity loan. 

  2. Fixed-rate HELOC: A home equity line of credit with a fixed rate locks in your interest rate and gives you the convenience of borrowing only what you need when you need it. You can borrow, repay, and borrow more, up to your limit, for five years.

  3. Credit card: Depending on how much you need, you can pay for home improvements with a credit card. This could be a good strategy if you know you can pay off the balance in a relatively short amount of time, especially if the amount you need is smaller than the minimum personal loan amount

Consider the best approach for you. Sometimes it makes sense touse a home equity loan for remodeling. In other cases, a personal loan might offer better flexibility. Even a credit card might be the best choice if you can get special financing and pay off the balance quickly.

Author - Miranda Marquit

Miranda Marquit is an award-winning freelance writer and podcaster who has covered various financial topics since 2006. Her work has appeared in numerous media outlets, and she is frequently asked to host workshops and appear on panels on topics related to financial wellness. She is the co-host of the Money Talks News podcast and a consumer finance advocate and spokesperson for moving hub HireAHelper.

Keith Osmun

Keith is an editor and fact-checker for Achieve. He makes sure the content is accessible by ensuring that each piece has impeccable grammar, an approachable tone, and accurate details.

Frequently asked questions

If you want to avoid borrowing against the home (or you don’t own the home), consider a personal loan. Funding is fast, and there are few restrictions on how you can use the money.

If you want the lowest interest rate or more than what you can get with a personal loan, consider borrowing against your home equity. A fixed-rate HELOC gives you the benefit of a fixed interest rate and a draw period so that you don’t have to take the whole loan in one lump sum if you don’t need all the money right away. 

A personal loan for home improvement requires a credit score of at least 620 and enough income to afford the loan.

A home equity loan for home improvement requires that you have sufficient equity in your home, a credit score of at least 620, and enough income to afford the loan.

The process to get either loan is very straightforward. You can apply online in both cases. The lender will review your application quickly, but for a home equity loan they will also need to order a home appraisal to determine the current market value of your home. A personal loan usually takes between one day and one week from application to funding. A home equity loan usually takes 15-18 days.

A personal loan has several advantages over credit card debt. It offers a fixed interest rate and payment amount, which makes budgeting and planning easier. You can also typically repay the loan faster, as the amount isn’t subject to fluctuating interest rates. Plus, it’s often cheaper than carrying a credit card. Finally, it can help improve your credit score over time if you make timely payments.

It's important to note that you cannot directly pay your credit card bill with a personal loan.

However, you can use a personal loan to pay off your credit card debt. Doing so can simplify your debt by consolidating multiple credit card balances into a single loan with a fixed interest rate and payment amount. This can potentially help you pay off your debt faster and save money on interest charges.

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