If you think you’re ready to tackle a major home improvement project, your first question may be how to pay for it. Whether you need to get a new roof or renovate your whole house, a home improvement loan can help you access the money to make it happen.
But qualifying for home improvement loans with bad credit can be a challenge. That doesn’t mean you’re completely out of luck, though. Here’s what you need to know.
Bad Credit Home Equity Loans for Home Improvement
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U.S. News selects the Best Loan Companies by evaluating affordability, borrower eligibility criteria and customer service. Those with the highest overall scores are considered the best lenders.
To calculate each score, we use data about the lender and its loan offerings, giving greater weight to factors that matter most to borrowers. For mortgage lenders, we take into account each company’s customer service ratings, interest rates, loan product availability, minimum down payment, minimum FICO score and online features.
The weight each scoring factor receives is based on a nationwide survey on what borrowers look for in a lender.
To receive a rating, lenders must offer qualifying loans nationwide and have a good reputation within the industry. Read more about our methodology.
Homefinity launched in 2018 as the online lending division of Fairway Independent Mortgage. It offers a variety of mortgage products, including conventional mortgages, Federal Housing Administration and Veterans Affairs mortgages, and mortgage refinancing.
North American Savings Bank, or NASB, is a Missouri-based bank and lender founded in 1927 that offers home mortgages nationally. NASB provides a variety of mortgage options, including conventional, Federal Housing Administration and Department of Veterans Affairs loans, and products for borrowers who might otherwise have trouble getting a mortgage.
Headquartered in Charlotte, North Carolina, Truist Bank was formed in 2019 after SunTrust and BB&T banks merged. Truist Bank offers a variety of mortgage products, including refinancing and home equity lines of credit.
Chase, one of the world’s largest banks, was founded in 1799 in New York and offers mortgage and refinance loans.
Simmons Bank was founded in Arkansas in 1903 and can now be found across six states. It offers mortgage products such as conventional and jumbo loans, federal-government-backed loans and state-approved down payment assistance programs.
PNC Bank is one of the largest banks in the United States, serving more than 9 million customers in all 50 states. A full-service mortgage lender, PNC offers most mortgage loan product types.
SoFi is an online lender founded in 2011 and headquartered in San Francisco that offers fixed-rate mortgages. Refinance, jumbo and home equity loans are also available.
CMG Financial is a privately held mortgage banking firm operating nationwide with localized support, founded in 1993 and based in San Ramon, California. The lender offers a range of products, including conventional, government and specialty mortgages, like jumbo loans.
Alliant Credit Union is a not-for-profit financial cooperative that serves customers in all 50 states. Alliant offers products such as conventional, jumbo, refinancing and home equity line of credit loans, but specific mortgage products may not be available in certain states.
Bad Credit Personal Loans for Home Improvement
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Lender |
Learn More |
APR |
Max. Loan Amount |
Min. Credit Score |
|---|---|---|---|---|
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4.74% to 20.28% | $100,000 | Not disclosed | |
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4.99% to 17.99% | $50,000 | 650 | |
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6.99% to 19.99% | $40,000 | 670 | |
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2.49% to 19.99% | $100,000 | 670 | |
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5.99% to 24.99% | $40,000 | 550 | |
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Not disclosed | $50,000 | 300 (or insufficient history) | |
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5.99% to 35.99% | $50,000 | 640 | |
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As low as 2.49% | $250,000 | Not disclosed | |
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6.99% to 19.99% | $50,000 | Not disclosed | |
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5.99% to 19.49% | $50,000 | 660 |
SoFi, short for Social Finance, offers personal loans of up to $100,000 to borrowers with very good to excellent credit. The nationwide lender was founded in 2011 and is known for offering loans with no fees. In addition to personal loans, SoFi offers student loans, auto and student loan refinancing, home loans, and small-business financing.
Although PenFed Credit Union – officially Pentagon Federal Credit Union – serves members of the armed forces, military associations, veterans and retirees, and their families, a military connection is not required to become a member. The credit union offers personal loans for eligible members and eligible co-borrowers in all 50 states, as well as in Guam, Puerto Rico and Okinawa, Japan.
Marcus is the consumer bank and lending arm of investment bank Goldman Sachs. Established in 2016, the lender offers personal loans of up to $40,000.
LightStream is the online consumer lending division of Truist, which formed in 2019 from the merger of BB&T and SunTrust. SunTrust acquired the assets of online lender FirstAgain in 2012 and relaunched the business as LightStream.
LightStream’s online personal loans range from $5,000 to $100,000 and can be used for nearly any reason. Personal loans are available to borrowers nationwide with good to excellent credit.
Payoff offers personal loans designed to consolidate credit card debt. It operates in all but two states and provides loans of up to $40,000.
Payoff is not a bank and instead works with lending partners that originate the loans. The California-based financial wellness company falls under a parent company called Happy Money, which takes a psychological approach to money matters.
Upstart is a lending platform that uses artificial intelligence to improve access to affordable credit. Based in California and founded by former Google employees in 2012, Upstart also applies AI to reduce lending risks and costs for its bank partners. The lending intermediary provides unsecured personal loans from $1,000 to $50,000 to borrowers anywhere in the U.S. except West Virginia or Iowa.
Best Egg is a national online lender founded in 2014 with backing from Marlette Funding, a financial services company with banking and technology experience. Best Egg offers personal loans starting at $2,000 that can be used to cover medical bills, home remodeling and a variety of other expenses. Cross River Bank in New Jersey issues Best Egg loans, which can be funded in as little as one business day.
Earnest no longer offers new personal loans and instead partners with Fiona, which searches a network of lenders. Visit the U.S. News Best Personal Loans page if you are seeking a lender for personal loans. Information below applied to Earnest when it was still offering personal loans.
Earnest offers personal loans in 45 states, plus the District of Columbia. Borrowers with good or excellent credit scores can qualify for loans of up to $250,000. Earnest is known for charging no fees on its personal loans.
TD Bank, N.A. is an American subsidiary of Canada’s international Toronto-Dominion Bank and is one of the 10 largest banks in the United States. The full-service bank has 1,200 locations across the Northeast, Mid-Atlantic, Washington, D.C., metro area, the Carolinas and Florida. TD Bank offers secured and unsecured personal loans and lines of credit to cover large and small expenses with amounts ranging from $2,000 to $50,000.
U.S. Bank has physical locations in more than 25 states and offers both short- and long-term personal loans with fixed annual percentage rates starting at 5.99%. Current customers may qualify to borrow up to $50,000 with a credit score of 660 or above, and options are available for noncustomers willing to open a checking or savings account.
Whenever you borrow money, the lender evaluates your finances to determine the likelihood that you’ll pay back the loan. Your credit score, a numerical representation of your borrowing risk, is a major factor in lending decisions.
Lenders typically require a FICO credit score of at least 620 to qualify for home loans, including home equity loans, but some loan programs can help you borrow with a lower score. A FICO score of 620 falls in the fair range, and a good score is 670 or better.
Before the coronavirus outbreak, “It was possible to get a loan or mortgage with a credit score as low as 500. (Now) most, if not all, lenders have temporarily raised their credit score minimums up into the 600s,” says Eric Jeanette, owner of mortgage loan marketplaces Dream Home Financing and FHA Lenders. “Today, finding any mortgage with bad credit has become very difficult.”
That goes for home improvement loans as well. In fact, three common home improvement loans may not be options if your credit score is too low, says Randall Yates, founder and CEO of The Lenders Network, a loan comparison site for borrowers with credit issues. That includes home equity loans; home equity lines of credit, or HELOCs; and cash-out refinances.
The credit requirements for home equity loans and HELOCs are similar to or even stricter than mortgages. That’s because one of these loans functions as a second mortgage on a property, and borrowers have a higher risk of default.
A cash-out refinance is also risky because you replace your traditional mortgage with a new loan for more than what you currently owe on your home, Yates says.
In general, bad credit home improvement loans are few and far between, including no-credit-check home improvement loans. “All home improvement loans require a credit check and a home appraisal,” Yates says.
If you have bad credit and need a home improvement loan, you might need to look to other financing sources, such as personal loans or government-backed loans.
If your credit disqualifies you from getting a home equity loan or cash-out refinance, you still have options.
Which loan is the right fit for you depends on your needs and preferences, but the options below could be good bets if your credit is less than perfect.
HUD 203(k) renovation loan: One of the best programs for financing home improvements is the U.S. Department of Housing and Urban Development 203(k) loan, according to Jeanette. It allows you not only to purchase or refinance a home with as little as 3.5% down but also to borrow the money you need to renovate your home.
Because these loans are backed by HUD’s Federal Housing Administration, they are much less risky for lenders, so credit requirements may be looser. The FHA requires a minimum credit score of 500, but each lender may have its own score requirement. You must also have no foreclosures in the last three years.
“Although there are strict guidelines on what repairs the loan can cover, it is very comprehensive, and it should be something all first-time homebuyers consider,” Jeanette says. “This loan can help you to get into a more expensive neighborhood by finding the one home that nobody else wants due to its condition.”
Title I loan: Another government-backed home improvement loan option is a Title I loan, which is insured by HUD. These loans can be used to finance improvements and repairs for a home, including a manufactured home, that has been occupied for at least 90 days.
Title I loans have no credit score requirements, and you can qualify for one of these loans, even if you haven’t built up equity.
If you borrow less than $7,500, the loan is unsecured; larger loan amounts must be secured with a mortgage or deed of trust on the property. No property inspection is involved.
Energy Efficient Mortgage program: The FHA’s Energy Efficient Mortgage program helps consumers with FHA mortgages finance improvements to make their homes more energy-efficient. For example, you could take out an EEM loan to install solar panels or upgrade insulation.
Similar to 203(k) and Title I loans, EEM loans are provided by independent lenders but are federally insured. This means that they may be easier to qualify for than traditional home improvement loans.
The FHA may allow you to get an EEM loan with a down payment of 3.5% and a credit score of 500, but requirements may differ among lenders.
Personal loan: “If you don’t have enough equity, or if your credit is not good enough to qualify for a home improvement loan, you can look into a personal loan,” Yates says.
Personal loans can be used for many reasons, including financing home improvements and repairs. An unsecured personal loan is ideal because you don’t have to pledge collateral and risk losing your home or other assets.
But if you have poor credit, you may have to get a secured loan, using your home or car as collateral to reduce the lender’s risk.
Generally, you can borrow between $1,000 and $100,000 with a personal loan. And because the repayment period is usually just two to five years, you can avoid racking up interest charges.
The problem is that with poor credit, personal loans can carry interest rates of 30% or more. Even so, a personal loan may be your best bet for financing, as long as you have repairs or improvements that don’t require a large budget.
Home improvement loan from a credit union: If you’re having trouble qualifying for a bad credit home improvement loan from a major bank, you might have more luck with a credit union. Because they are nonprofits, credit unions may offer lower interest rates and more flexible credit requirements to borrowers than major financial institutions.
You’ll have to become a member of a credit union to take advantage of its benefits. Membership may be limited to a community, an employer or a church, for example.
Some credit unions also allow you to join by opening a small savings account.
Other government-backed programs: Many government-backed home improvement loans are available to borrowers. Often, these loan programs have low or no credit score requirements.
Two examples are the U.S. Department of Agriculture’s Single Family Housing Direct Home Loans program and the U.S. Department of Veterans Affairs’ Specially Adapted Housing grants.
Low-income rural homeowners can use the USDA’s direct home loans to repair, renovate or relocate homes. The borrower must be unable to get a loan from other sources and have a “reasonable” credit history, according to the loan officer.
Specially Adapted Housing grants are for veterans and service members with certain disabilities. The grants don’t have to be repaid, which means you don’t need a credit check to qualify. They fund home improvements that allow for more comfortable and independent living.
Find the Mortgage That’s Right for You
Make sure your credit score is as high as possible before applying. That means you might want to work on repairing your credit, especially if your project isn’t urgent.
Yates suggests taking time to pay down debt, especially credit cards, to give your score a boost.
If you must borrow money for a home improvement project now, compare loan offers and interest rates from three to four lenders to ensure that you’re getting the best deal. Getting a few different quotes can help you negotiate loan terms, Yates says.
Of course, borrowers with good credit qualify for the best loan terms and lowest interest rates. “In some cases, such as a mortgage loan, good credit can save you tens of thousands of dollars over the course of the loan,” Yates says.
Navy Federal Credit Union serves more than 11 million active-duty and retired military, veteran, and Department of Defense members as well as their families. Founded in 1933 and based in Vienna, Virginia, this not-for-profit credit union offers a range of products, from credit cards to auto loans. Navy Federal is the largest credit union in the U.S., with $160.5 billion in assets and 349 branches worldwide.
Bank of America serves roughly 67 million customers in all 50 states. The lender offers conventional, Federal Housing Administration, Department of Veterans Affairs and jumbo loans as well as home equity lines of credit and mortgage refinancing.
U.S. Bank is a national bank based in Minneapolis that provides various banking products and services as well as a handful of mortgage options. The lender offers conventional loans, Federal Housing Administration loans, Department of Veterans Affairs loans, jumbo loans and more.
Discover is a major credit card issuer, but its financial products and services go beyond that. In addition to credit cards and banking, Discover offers mortgage refinance and home equity loans to qualified borrowers. You can use the money from a home equity loan for many purposes, including making home improvements, consolidating debt or paying for other major expenses.
Spring EQ, founded in 2016, is a Philadelphia-based mortgage lender that specializes in home equity loans and operates in 39 states and Washington, D.C. The technology-based loan originator, which plans to expand into more states, also provides home purchase, rate-and-term refinance, and cash-out refinance loans. Spring EQ’s digital process can streamline borrowing and help people get their money in as little as 11 days.
Flagstar offers banking and loan products to borrowers in all 50 states. Borrowers can obtain mortgage and home equity products including conventional loans, Federal Housing Administration loans, Veterans Affairs loans, U.S. Department of Agriculture loans, adjustable-rate mortgages, and home equity loans and lines of credit.
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