title: How to get a home improvement loan?
meta-title: How to get a home improvement loan?
url: https://www.axosbank.com/personal/insights/loans/home/how-to-get-a-home-improvement-loan
description: Learn how to get a home improvement loan, compare options like HELOCs and personal loans, and choose financing that fits your renovation budget.
date-published: 2026-08-27
last-fetched: 2026-09-15T19:04:09Z
language: en-US
content-type: insights-article
Breadcrumb: Insights > Loans > Home > How to get a home improvement loan?
How to get a home improvement loan?
A step-by-step guide for homeowners on financing a renovation, covering how to estimate project costs, check credit and home equity, and compare loan options like HELOCs, home equity loans, and personal loans.
To get a home improvement loan, start by estimating your project costs and checking your credit score; aim for 670 or higher to qualify for the best rates.
From there, compare options like unsecured personal loans, home equity lines of credit (HELOCs), or cash-out refinances, then get pre-qualified with banks, credit unions, or online lenders before formally applying.
Renovating your home can increase its value and comfort, but it often comes with a significant price tag. The right loan helps you cover those costs while spreading payments over time.
This article walks through each step of the process so you can borrow with confidence.
Disclaimer: Note: Terms and rates vary by lender. Consult a financial advisor to determine which loan type is right for your situation.
Table of Contents
- What is a home improvement loan?
- Step 1: Define your renovation goals and budget
- Step 2: Check your finances and home equity
- Step 3: Compare your loan options
- Step 4: Gather required documents
- Step 5: Apply for your loan
- Step 6: Manage your repayment
- Key considerations before borrowing
- The bottom line
What is a home improvement loan?
A home improvement loan lets you borrow money to repair, remodel, or upgrade your home. Depending on your finances and home equity, you can choose from several loan types:
- Home equity loan
- Home equity line of credit (HELOC)
- Cash-out refinance
- FHA 203(k) loan
- Unsecured personal loan
Each option has different requirements, rates, and repayment terms. The best fit depends on your home's value, your available equity, and how much flexibility you need.
Step 1: Define your renovation goals and budget
Start by mapping out your project and estimating total costs. A few things to nail down before you borrow:
- Get multiple quotes: Contractor bids vary widely - getting at least three gives you a realistic cost range.
- Account for all line items: Include materials, labor, permits, and a 10-15% cushion for unexpected expenses.
- Know your project type: Cosmetic upgrades (paint, fixtures, flooring) typically cost less and fund faster than structural work (additions, foundation, roofing).
Knowing the full scope of your project helps you avoid over- or under-borrowing later.
Step 2: Check your finances and home equity
Most secured home improvement loans require you to have built enough equity in your home, typically 15-20%.
Other key factors lenders generally review include:
- Credit score: 670 or higher generally qualifies you for the best rates, though some lenders accept lower scores with adjusted terms.
- Debt-to-income (DTI) ratio: Most lenders prefer a DTI under 43%.
- Stable income: Proof of steady employment or self-employment income.
Example: If your home is worth $500,000 and you owe $350,000, you have $150,000 in equity. With an 80% loan-to-value (LTV) cap, you could borrow roughly $50,000-$60,000 for home improvements.
Step 3: Compare your loan options
There's more than one kind of home improvement loan. Here's a look at the main options and when each tends to fit best.
| Loan type | Funding speed | Collateral | Best for |
|---|---|---|---|
| Home equity loan | 2-4 weeks | Home equity | Major one-time projects |
| HELOC | 2-4 weeks | Home equity | Ongoing or phased projects |
| Cash-out refinance | 3-6 weeks | Home equity | Replacing your mortgage while renovating |
| FHA 203(k) | 4-8 weeks | Home purchase or refinance | Buying a fixer-upper |
| Personal loan | 1-5 days | None | Smaller or urgent repairs |
Pro Tip: For smaller projects, a personal loan may be the fastest choice. For large remodels or additions, tapping home equity usually offers lower rates.
Axos home equity loans
Put your home's equity to work.
A home equity loan from Axos lets you borrow against the value you've built; with a fixed rate, predictable payments, and no surprises. Ideal for major renovations where you need a lump sum upfront.
Step 4: Gather required documents
Having paperwork ready can speed up approval. Most lenders ask for:
- Recent pay stubs or tax returns
- W-2s or profit-and-loss statements
- A current mortgage statement
- Project cost estimates or contractor bids
- Home appraisal (for secured loans)
Being organized can shave days off your approval time and show lenders you're a prepared borrower.
Step 5: Apply for your loan
Most lenders let you start online. The process typically includes:
- Prequalification: A soft credit check gives you estimated rates and terms without affecting your score.
- Full application: Submit documentation for verification.
- Appraisal: For secured loans, a professional determines your home's current or after-renovation value.
- Underwriting: The lender reviews your financial profile and finalizes terms.
- Closing and funding: Sign your documents and receive funds, either as a lump sum or in stages.
Funding times vary by loan type. Personal loans can arrive in days, while secured loans may take several weeks.
Step 6: Manage your repayment
Repayment terms can range from 5 to 30 years, depending on the loan type. Fixed rates mean predictable monthly payments, while variable rates (common with HELOCs) can fluctuate over time.
To stay on track:
- Borrow only what you need: Taking more than necessary increases your monthly payment and reduces future equity.
- Set up automatic payments: Helps you avoid missed due dates and potential late fees.
- Track your renovation impact on home value: It helps you gauge your project's return on investment over time.
Pros and cons of home improvement loans
| Pros | Cons |
|---|---|
| Can increase your property value | Home may serve as collateral |
| Fixed or flexible repayment options | Appraisals, fees, and closing costs can add up |
| Possible tax deductions for qualifying renovations | Over-borrowing can reduce future equity |
Key considerations before borrowing
- Interest rate environment: Fixed rates offer stability. Variable rates may rise or fall depending on market conditions.
- Loan size vs. home value: Avoid borrowing more than 80-90% of your home's current value.
- How long you plan to stay: Large loans make more sense if you remain in the home long enough to recoup the cost.
- Funding speed vs. cost: Faster loans often carry higher rates weighing urgency against total cost of borrowing.
The bottom line
Knowing how to get a home improvement loan puts you in a stronger position before you ever speak to a lender.
Estimate your costs, review your finances, compare your options, and choose the loan that fits your budget and timeline.
Ready to take the next step? Explore home lending options from Axos to find a solution that works for your project.
Frequently Asked Questions
What credit score do I need for a home improvement loan?
Most lenders look for a score of 670 or higher for the best rates. Some lenders accept lower scores, but you may face higher interest rates or stricter terms. Check your score before applying, so you know where you stand.
What's the difference between a home equity loan and a HELOC?
A home equity loan gives you a lump sum at a fixed rate, which works well for one-time projects with a defined cost. A HELOC works more like a credit card; you draw funds as needed up to a set limit, which suits phased or ongoing renovations.
Can I get a home improvement loan without home equity?
Yes. An unsecured personal loan doesn't require equity or collateral. The trade-off is typically a higher interest rate and shorter repayment term compared to equity-based options.
Are home improvement loan interest payments tax deductible?
Interest in home equity loans and HELOCs may be tax deductible if the funds are used to buy, build, or substantially improve your home. Consult a tax advisor to confirm eligibility based on your specific situation.
primary-topic: Home improvement loan process
key-entities: home equity loan, HELOC, cash-out refinance, FHA 203(k) loan, unsecured personal loan, Axos
intent: informational
contains-rates: false
contains-faq: true
related-urls: https://www.axosbank.com/personal/borrow/mortgages/heloc