If you’re a homeowner, remodeling projects can be a good way to fix up your house and increase the value of your property. If you’re on tight budget, consider getting a home equity line of credit from your local credit union or bank to fund your next project. A HELOC can be a good alternative to using credit cards or taking out a personal loan or FHA 203(k) loan.
GOBankingRates identified 10 of the best home remodel loans typically available from banks, local credit unions and online lenders. Whether you want to finance home improvement projects, apply for a cash-out refinance loan or construction loan, first decide how to leverage your home equity, then choose the best loan for your situation and location — some rates vary depending on where you live. Here are the best home improvement loans:
|Best Home Improvement Loans|
|Home Loan||Rate (APR)||Terms||Limits||Fees|
|U.S. Bank HELOC||Intro rate of 2.99% for 6 months, then 4.25% to 8.25%||Flexible up to 360 months, 30-year term||$15,000 to $750,000||No application fees|
No closing costs
|Bank of America HELOC||Varies by state||10-year draw, 20-year repayment||N/A||No application fees|
No closing costs
No annual fee
|TD Bank HELOC||3.00%, 3.25%, 4.00%, 5.75%||5 to 30 years||Up to $500,000||$99 origination fee|
$50 annual fee
|Citibank HELOC||5.34% to 8.24%||5- or 10-year draw period,|
20-year repayment period
|$10,000 to $1,000,000||N/A|
|Chase HELOC||Varies||Up to 20-year repayment period||Depends on amount of equity in home and property location||$50 origination fee|
$50 annual fee
No closing costs
|Avant Home Improvement Loan||9.95% to 35.99%||24 to 60 months||$2,000 to $35,000||Administration fee ranges from 1.50% to 4.75%|
|Wells Fargo HELOC||Varies||Fixed rate 1-20 years; 10 years and 1 month draw period + repayment period||$25,000+||Minimum monthly payment of $100,|
$75 annual fee,
$500 prepayment penalty fee might apply if the account is closed within 3 years of account opening
|Flagstar Bank HELOAN||4.48%||Inquire with lender||Inquire with lender||No prepayment penalties|
|LightStream Home Improvement Loan||4.99% to 13.74%||24 to 144 months||$5,000 to $100,000||No fees|
No prepayment penalties
|BBVA Compass HELOC||4.49% variable through June 30, 2018||Up to 10-year draw period|
10- or 15-year repayment period
|N/A||$75 annual fee|
$75 fee for fixed-rate conversion
Bank-paid closing costs available
|Interest rates stated are accurate as of April 25, 2018. Rates are subject to change.|
1. U.S. Bank HELOC
Rate: 2.99% APR for six months, then 4.25% to 8.25% APR
Terms: Flexible up to 360 months, 30-year term
Limits: $15,000 to $750,000, depending on credit score and loan-to-value amount
Fees: No application fee or closing costs
You can use the U.S. Bank HELOC to remodel your home or consolidate debt — and save money on closing costs and taxes. Benefits of this HELOC include getting funding just three business days after you sign loan documents, plus no closing costs or application fees. Customers who have monthly payments deducted automatically from a U.S. Bank checking account receive a 0.5 percent interest rate discount.
Check Out: How to Get the Best Home Equity Rates
2. Bank of America HELOC
Rate: Varies by state
Terms: 30-year term (10-year draw, 20-year repayment)
Fees: No application fee, annual fee or closing costs
You can apply for a Bank of America HELOC in 15 minutes and check your application status online. If you set up automatic monthly payment deductions from a Bank of America checking or savings account, you’ll get a 0.25 percent rate discount and a 0.1 to 1 percent discount for making an initial withdrawal when you open the account. If you’re a Preferred Rewards member, you’ll be eligible for discounts of 0.125 percent to 0.375 percent based on your tier. Plus, you can eventually convert your HELOC into a fixed-rate loan.
Click to see 20 home renovations you can make for less than $1,000.
3. TD Bank HELOC
Rate: 3.00% to 5.75% APR
Terms: Five to 30 years
Limits: Up to $500,000
Fees: $50 annual fee, $99 origination fee
If you want to refinance your mortgage, make home improvements or just take out some extra cash, a TD Bank HELOC might be a good option for you. There are no closing costs required if your loan is below $500,000. TD also has some of the lowest home improvement loan rates available.
4. Citibank HELOC
Rate: Prime rate + customer’s margin; currently 5.34% to 8.24% APR
Terms: Five- or 10-year draw period with a typical repayment period of 20 years
Limits: $10,000 to $1 million
A Citibank HELOC or home equity loan can cover home improvement costs or help you consolidate debt. You can convert your credit line balance from a variable HELOC rate to a fixed rate to help you avoid paying additional interest and make monthly budgeting easier. This can be done at any time during the draw or repayment period if your account is up-to-date and your principal balance is between $10,000 and $1 million. You can apply online, by phone or in person at a Citi branch. The Citibank home equity loan is not available for mobile homes.
5. Chase HELOC
Terms: Repayment up to 20 years
Limits: Depends on amount of equity in home and property location
Fees: No closing costs, $50 annual fee, $50 origination fee
Chase banking customers or those willing to open a Chase personal checking account get a 0.25 percent rate discount. If you have a Premier Platinum checking account, that rate will increase to 0.5 percent. Chase offers a fixed-rate lock option, which enables you to switch from a variable rate to a fixed rate. Your loan amount will depend on how much equity you have in your home.
Rate: 9.95% to 35.99% APR
Terms: 24 to 60 months
Limits: $2,000 to $35,000
Fees: 1.50% to 4.75% administration fee
Avant offers fixed-rate home improvement loans that can be used as a remodeling loan, a home repair loan or to help pay for an addition to your home. Unlike home equity loans, these home improvement loans are issued based on creditworthiness rather than home equity. Funds, available as soon as the next business day, are directly deposited into your bank account, so you can use the funds however best suits your needs.
7. Wells Fargo HELOC
Rate: Prime rate plus capped rate
Terms: 10-year draw period plus one month
Fees: Minimum monthly payment of $100, $75 annual fee, $500 prepayment penalty fee might apply if the account is closed within three years of account opening
You can apply for Wells Fargo HELOC or a fixed-rate home equity loan for any type of home improvement financing. The draw period is 10 years plus one month. Although the loan’s APR on the line of credit increases with the prime rate, there are rate caps on the loan, so the rate will never increase more than 2 percent annually based on the date you signed your line of credit agreement. You can also convert all or part of your variable-rate balance into a fixed rate during the draw period.
8. Flagstar Bank HELOAN
Rate: 4.48% APR
Terms: Inquire with lender
Limits: Inquire with lender
Fees: No prepayment penalties
With a Flagstar Bank home equity loan, you’ll receive a fixed interest rate for the life of your loan. There’s no prepayment penalty, and you’ll receive the loan as a one-time, lump-sum payout, which is ideal for larger expenses or purchases. The interest paid might also be tax deductible. The home equity loan is available for residential properties only.
9. LightStream Home Improvement Loan
Rate: 4.99% to 13.74% APR
Terms: 24 to 144 months
Limits: $5,000 to $100,000
Fees: No fees, no prepayment penalties
LightStream home improvement loans have no fees or prepayment penalties, and there are no appraisals or home equity requirements. You can choose your funding date, and can even receive funds the day you apply for a loan if you apply on a banking business day before 2:30 p.m. EST and your application is approved. Home improvement loans from LightStream are fixed-rate, and depending on your credit, you can take as much as 12 years to repay the loan.
10. BBVA Compass HELOC
Rate: 4.49% variable APR through June 30, 2018
Terms: Draw period up to 10 years; repayment period of 10 or 15 years
Fees: $75 annual fee, $75 fee for fixed-rate conversions, bank-paid closing costs option
A BBVA Compass HELOC offers a competitive adjustable rate for financing home improvements. During your draw period you can make interest-only payments or pay down the balance, and you can lock up to three portions of your credit line with a fixed rate. You can access your funds over the phone, at a branch, with a VISA Platinum credit card or convenience checks.
How to Get Home Improvement Loans With Bad Credit
Qualifying for a home improvement loan with bad credit can be difficult, but it’s not impossible. To increase your chances of being approved, consider the following options:
- Increase your credit score before applying. Work on repairing your credit before submitting your loan application.
- Secure the loan with collateral. Use something of value, such as a car or piece of jewelry, to use as collateral for the loan. Or you can borrow money from your home equity.
- Use a co-signer. Ask someone with good credit to serve as a co-signer on the loan to increase your chances of being approved.
- Use a loan broker. A loan broker can help you find a lender that offers home-improvement loans to people with bad credit.
Click to see secret ways to save money at the home depot.
More on Homes
- Best Lenders for Bad Credit Home Loans
- Why Most HELOCs Have an Adjustable Rate
- How to Get a Discover Home Equity Loan
Gabrielle Olya contributed to the reporting for this article.
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