How to Get a Home Improvement Loan Without Equity

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How Student Loan Hero Gets Paid

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If you’re a homeowner, there’s a good chance you’re planning home improvements. In fact, a 2018 survey by LightStream found that 45% of respondents expect to spend at least $5,000 on a project and the percentage of people planning to spend $35,000 or more doubled from the earlier year.

Whether you want to build a deck, remodel your kitchen, or upgrade a bathroom, you might need a home improvement loan to make it happen.

Getting a home improvement loan with no equity doesn’t have to be a daunting task, though. Here’s how to do it.

How to get a home improvement loan with no equity

When many people think of borrowing money to make home improvements, they think of home equity loans or lines of credit. The value (or equity) in your home secures the loan, allowing you to potentially fund an expensive project.

However, not everyone has a lot of equity in their home. Recent homeowners might not have had time to pay down the principal on their mortgage. And a drop in home values for long-time homeowners can erase some of their equity.

The good news is it’s possible to get a home improvement loan with no equity. There are two options.

1. Personal loan

“Instead of basing the loan on a home’s value, lenders evaluate personal loan applications based on factors like a person’s credit score, credit history, and creditworthiness,” said Abhinav Anand, the head of consumer lending at Goldman Sachs Bank USA.

Consumer lenders such as Marcus and SoFi offer home improvement loans. Depending on your credit history, it’s possible to find interest rates that rival those offered on home equity loans.

2. Title I Property Improvement Loan

If you need to borrow $7,500 or less, it’s possible to get a loan insured by the U.S. Department of Housing and Urban Development (HUD).

HUD doesn’t issue the loan, but it works with private lenders to help you get funding to make repairs, improvements, and alterations to your home — all without requiring you to secure the loan with a property.

However, you have to show you have the “ability to repay the loan in regular monthly payments” — what this means can differ since the ability to repay is interpreted by the lender and the government agency insuring the loan.

Advantages of getting a home improvement loan with no equity

Most unsecured home improvement loans have fixed interest rates, offering an advantage over home equity lines of credit that often feature adjustable rates, according to Jennifer Beeston, the vice president of mortgage lending at Guaranteed Rate.

“If the loan has an adjustable feature, you need to understand what the max adjustment interest rate is,” Beeston said.

Fixed rates become even more important in today’s environment of rising rates. With the Federal Reserve signaling more rate hikes in the coming months, it can make sense to lock in a rate with a fixed-rate unsecured home improvement loan.

The application process for a no-equity home improvement loan can be faster than for a traditional home equity loan, Anand pointed out. Because there’s no need for an appraisal, it’s possible to get your personal loan money in a matter of days, instead of waiting up to 30 days or more to get started on your project.

Finally, when you figure out how to get a home improvement loan with no equity, you don’t need to worry about losing your house if you can’t make your loan payments.

Drawbacks to getting a no-equity home improvement loan

Without equity to secure the debt, you might not be able to borrow as much money as you want.

LendingClub and Marcus limit loans to $40,000, and Avant won’t authorize a home improvement personal loan for more than $35,000. Even though it’s possible to borrow up to $100,000 from SoFi, you might not qualify for that amount if you don’t meet the lender’s income and credit requirements.

And in some cases, you’ll pay a higher interest rate for a no-equity home improvement loan, Anand said. If you have good credit, you might be able to get a lower rate using a personal loan. However, once your credit is in “fair” territory, a personal loan can have higher rates because it’s not anchored to an asset.

Choosing a no-equity home improvement loan

In the end, whether you get a home improvement loan with no equity depends on your goals and financial situation.

If you don’t have enough equity in your home to use it as security for your debt, you have little choice — it’s an unsecured home improvement loan or nothing.

However, if you do have the equity in your home, weigh your options. Compare interest rates and other terms, and think about whether you want to tie up some of your home’s value in an improvement loan.

“Home improvement personal loans are great for owners looking to make repairs or improvements, like adding new floors or remodeling a kitchen or bathroom,” said Anand. “It can help them get closer to their dream home without having to borrow against it.”

Interested in a personal loan?

LendingTree allows you to compare rates from multiple lenders by filling out one easy form. How Student Loan Hero Gets Paid

How Student Loan Hero Gets Paid

Student Loan Hero is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). Student Loan Hero does not include all lenders, savings products, or loan options available in the marketplace.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Student Loan Hero is an advertising-supported comparison service. The site features products from our partners as well as institutions which are not advertising partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

How Student Loan Hero Gets Paid

How Student Loan Hero Gets Paid

Student Loan Hero is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). Student Loan Hero does not include all lenders, savings products, or loan options available in the marketplace.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Student Loan Hero is an advertising-supported comparison service. The site features products from our partners as well as institutions which are not advertising partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

RATES (APR)loan amount
5.99% – 18.85%1 $5,000 to $100,000
6.46% – 35.99% $1,000 to $50,000
5.94% – 35.97%* $1,000 to $50,000
99.00% – 199.00%2 $500 to $4,000
5.99% – 24.99%3 $5,000 to $40,000
7.99% – 29.99%4 $7,500 to $40,000
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1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Fixed rates from 5.99% APR to 18.85% APR (with AutoPay). SoFi rate ranges are current as of March 19, 2020 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your creditworthiness, years of professional experience, income and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
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  3. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  4. If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.
  5. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
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  1. To qualify, a borrower must (i) be a U.S. citizen or permanent resident; (ii) reside in a state where OppLoans operates; (iii) have direct deposit; (iv) meet income requirements; (v) be 18 years of age (19 in Alabama); and, (vi) meet verification standards.
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  3. OppLoans performs no credit checks through the three major credit bureaus Experian, Equifax, or TransUnion. Applicants’ credit scores are provided by Clarity Services, Inc., a credit reporting agency.

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  1. The loan terms presented are not guaranteed and APRs presented are estimates only. To obtain a loan you must submit additional information and documentation and all loans are subject to credit review and our approval process. The range of APRs is 7.99% to 29.99% and your actual APR will depend upon factors including your credit score, usage and history, the requested loan amount, the stated loan purpose, and the term of the requested loan. To qualify for a 7.99% APR loan, a borrower will need excellent credit on a loan for an amount less than $12,000.00, and with a term equal to 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could help you also qualify for the lowest rate available. All loans are made by Cross River Bank and MetaBank®, N.A., Members FDIC.
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Personal loans made through Upgrade feature APRs of 5.94%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Accept your loan offer and your funds will be sent to your bank or designated account within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes the transaction. From the time of approval, funds should be available within four (4) business days. Funds sent directly to pay off your creditors may take up to 2 weeks to clear, depending on the creditor. Personal loans issued by Upgrade’s lending partners. Information on Upgrade’s lending partners can be found at https://www.upgrade.com/lending-partners/.