Best Home Improvement Loans of 2026
So you’ve got a home improvement project on the horizon. Maybe your bathroom needs new tile or it’s time to upgrade those kitchen cabinets. A home improvement loan can help you fund whatever’s next up on your renovation list.
But a home improvement loan isn’t just one product — it’s a blanket term for ways to finance your projects. For instance, unsecured personal loans, home equity loans, home equity lines of credit can all be used as home improvement loans.
In our guide, we’ll go over the best home improvement loans in 2026. We’ll also walk you through how to decide which is best for you based on factors like your project size, how much home equity you have, your credit and how fast you need the money.
Home Improvement Financing Options at a Glance
Here’s a look at home improvement financing options.
| Financing Type | Secured or Unsecured | Typical Rate Level | Funding Speed | Best For | Collateral Risk |
|---|---|---|---|---|---|
| Home Equity Loan | Secured | Lower, fixed rates | As quick as two weeks | Single, large projects | Your home is collateral |
| Home Equity Line of Credit (HELOC) | Secured | Lower rates, but often variable | As quick as two weeks | Multiple or phased projects | Your home is collateral |
| Personal Loan | Unsecured | Rates depend on credit score | As quick as same-day | Mid-sized, well-defined home projects | No collateral |
| Cash-out refinance | Secured | Lower rates but requires refinancing | 30-45 days | Projects that increase your home’s value | Your home is collateral |
| FHA renovation loan | Secured | Lower rates | 45-60+ days | Fixer uppers | Your home is collateral |
| Credit card | Unsecured | High rates | As quick as same-day | Small projects you can pay off quickly | No collateral |
Personal Loans for Home Improvement
A personal loan is an unsecured loan that can be used to pay for just about anything. If you need money quickly, this might be your best bet.
You can stick with your current bank or shop around for a personal loan that meets your needs on a marketplace like AmOne. Depending on your credit score — good or excellent would benefit you the most — you could qualify for a loan with a low interest rate. Traditional banks, credit unions and financial institutions all offer personal loans with various conditions and rates.
Loan amounts can go up to $100,000 from some lenders, and terms typically a few years. Personal loans are best for borrowers without much home equity, renters or small-to-midsize projects who want speed and no collateral. However, these typically come with higher rates than home-equity options, possible origination fees, and no tax deduction.
Home Equity Loans and HELOCs
Both home equity loans and HELOCs are secured options for homeowners with equity and typically offer lower rates than personal loans because your home is collateral. But that also means your home is at risk if you don’t repay, and both come with closing costs. HELOC interest is also tax-deductible if you use the borrowed funds to buy, build or substantially improve the main or second home that secures the loan.
Here’s a look at each:
HELOCs
A home equity line of credit, or HELOC, is a revolving credit line you draw from as needed. It can be used to fund major expenditures, such as home improvement plans but also non-property expenses like education (technically any home improvement loan can be put toward other expenses). Unlike a personal loan, a HELOC is a secured loan, and the collateral is the borrower’s equity in their home.
With a home equity line of credit, there is a credit limit, a specified borrowing period and, typically, varying interest rates and payment terms. The money is usually dispersed within one to two weeks.
HELOC interest is also tax-deductible if you use the borrowed funds to buy, build or substantially improve the main or second home that secures the loan.
Home Equity Loan
A home equity loan comes with fixed payments and a fixed interest rate for the duration of the loan (or “term”). With home equity loans, also referred to as a second mortgage, you get the entire amount all at once — which could be a good or not-so-good thing, depending on what you have planned with the money.
Unlike a HELOC, interest rates and monthly payments are fixed. However, it’ll generally take you a while to see the money — anywhere from a week to a couple of months. A home equity loan could be a good option for you if you know you’ll spend the money wisely and pay it back on time.
Interest on home equity loans have the tax benefit as HELOCs — so long as you use the borrowed money to buy, build or substantially improve your main or second home that secures the loan, the interest is tax-deductible.
Other Ways to Finance Home Improvements
Here are other ways to finance your home improvements:
Cash-out refinance: This option allows you to refinance and replace your mortgage with a larger one, taking the difference in cash. It’s best when refinancing rates beat your current mortgage rate.
FHA renovation loans: These are government-backed options that roll renovation costs into a mortgage or offer improvement-specific loans.
0% intro-APR credit cards: These are best used for small projects that can be paid off within the promo period.
Contractor or point-of-sale financing: Some contractors offer special financing. These are convenient, but it’s important to consider your options carefully.
How to Choose the Right Home Improvement Loan
Not sure which option is right for you. Ask yourself these questions:
How big is the project? If it’s small or cosmetic, you may be able to get away with using a 0% APR credit card, so long as you can pay off the total amount before the promo period is up. Another option is a small personal loan, but rates can be high if you’re credit is less-than-stellar. If it’s large or structural, a home equity loan, HELOC, large personal loan, cash-out refinance or FHA renovation loan is probably better.
Do you have home equity and are you willing to use your home as collateral? If you answered “yes” to this question, a home equity loan, HELOC, cash-out refinance or FHA renovation loan are your options. No-collateral options include credit cards and personal loans.
What’s your credit like? Good credit goes a long way with any of your home improvement loan options as it can help you secure a lower rate. But if your credit isn’t fantastic, an FHA renovation loan requires a lower minimum credit score.
How fast do you need the money? If you need quick money, personal loans and credit cards offer the fastest funding. The other options — a home equity loan, HELOC, cash-out refinance or FHA renovation loan — take at least two weeks.
How to Get a Home Improvement Loan
Here’s a look at the process to get a home improvement loan:
- Get a firm cost estimate for your project so you know how much to borrow
- Check your credit and, for equity options, estimate your available home equity
- Prequalify with a soft credit check and compare rates across a few lenders
- Weigh total cost including rates and fees, monthly payment, funding speed and collateral risk
- Apply, submit documents and receive funds
Pros and Cons of Financing Home Improvements
Here’s a look at the pros and cons of financing home improvements.
Pros
- Lets you start a project now and space out the cost
- The right choice can be affordable
Cons
- Secured options put your home at risk
- Stretching project costs long term raises total interest
Frequently Asked Questions
There’s no single best option — it depends on your situation. If you don’t have much home equity, are a renter, or need money fast for a small-to-midsize project, an unsecured personal loan is usually the most practical choice. If you’re a homeowner with equity tackling a large project and you want the lowest rate, a home equity loan or HELOC is typically cheaper (though it puts your home on the line). For a small project you can repay quickly, a 0% intro-APR credit card can even be free if you clear the balance in time. Match the financing to your project size, equity and how fast you need the funds.
It varies by financing type. For an unsecured personal loan, the best rates go to good-to-excellent credit, though some lenders work with fair credit at higher rates. For a home equity loan or HELOC, lenders weigh both your credit and your available home equity, so strong equity can help offset a lower score. The best way to gauge your options is to prequalify with a soft credit check, which lets you compare estimated rates without affecting your score.
It depends on the type of financing. Interest on an unsecured personal loan generally isn’t tax deductible, even when you use it for your home. Interest on a home equity loan or HELOC may be deductible if you use the funds for substantial improvements that add value to the home and you meet IRS requirements. Because tax rules are specific and change, confirm the current rules on the IRS website or with a tax professional before counting on a deduction.
Both let you borrow against your home’s equity, but they work differently. A home equity loan gives you a fixed lump sum at a fixed rate, repaid in equal monthly payments — best for a large, one-time project with a known cost. A HELOC is a revolving line of credit you draw from as needed during a set period, often with a variable rate — best for ongoing or phased projects where you’re not sure of the total cost upfront. Both use your home as collateral, so your home is at risk if you can’t repay.
Katie Sartoris is a Certified Educator in Personal Finance and an award-winning journalist with a decade of reporting and editing experience in the industry. She joined the Penny Hoarder from Gannett, where she was a local news editor in Central Florida. Katie lives in Leesburg with her husband and cats, and is working on restoring and updating her original mid-century home.
