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Man and woman shake hands with contractor on their home remodel project

If you’re one of the many people spending more time at home these days, you might be aware of all those little and not-so-little home blemishes. And you may be getting eager to fix them, either for yourself or with hopes of eventually putting your house up for sale. But first, you should look into options for financing home renovations.

Whether you need to make major repairs, do some minor remodeling, or even attend to routine maintenance like window cleaning, landscaping, updating chipped paint, etc.—and you don’t have large amounts of cash on hand—a home improvement loan can help you bridge the gap.

The term “home improvement loan” can refer to an unsecured personal loan you can use for home upgrades. But there are actually several ways to finance a home renovation. Once you are aware of their nuances, you can choose the best one for you and the specific upgrades you’re considering.

How to finance a home renovation

How you finance your home improvement project will depend on a variety of factors, including the equity you have in your home, your credit, whether you already have debt you’re paying down, and your broader financial goals.

For example, a home equity loan might be the right choice for financing home renovations if you already know you’ll be spending more than $40,000 and have some equity. Or a mortgage refinance could be a good idea if interest rates are beneficial to you and you plan to stay in the home for seven or more years. In that case, you could leverage the equity you’ve accumulated to borrow a bigger sum of money, and cash out a portion of it to pay for your home improvements.

Likewise, a personal loan might be ideal if you don’t have a lot of equity in your home or don’t want to use it as collateral.

Choose the right loan for you

Before applying for a loan, make sure you understand all the costs associated with your proposed project and how they’ll fit within your household budget. Then check out the different kinds of home improvement loans below, as well as their pros and cons.

How to get a home improvement loan

Once you have an idea of the type of loan you might want, be sure to understand what’s involved in the application process. Then you’ll want to compare several potential loan providers. You can use an online tool that will estimate your monthly payment amount, like our personal loan calculator.

After you’ve narrowed the list, figure out how much the loan will cost you each month. Among the first things you’ll want to do is calculate the total amount you will need for the project, including incidentals that might not jump out at you right away. Use this information to find out what loans you prequalify for and to evaluate their terms and monthly payment requirements to find the best option.

Once you have all your documents in order (you might need tax returns, a credit report, bank statements, proof of home ownership, or government-issued identification), you can submit your loan application.

If you choose a personal loan for your home improvement projects, you may be able to complete the entire application online and benefit from a faster approval time. With a Discover personal loan, for example, you can get up to $40,000 and the money can be sent as early as the next business day after you accept the terms of the loan.

What kinds of improvements can you make using a personal loan?

Regardless of the kind of project you have in mind, a personal loan puts cash in your pocket that can be used to pay for a wide variety of home improvement costs. For example, you could use funds from a personal loan to pay a designer, your contractor, shop for furniture, or buy supplies. The specific use is up to you, and this flexibility is one of the main reasons personal loans are so popular. 

Taking the stress out of home renovation projects

Once you’ve decided to improve your home, and you know which projects you want to start, get ready for an adventure. Eventually, you’ll get to enjoy all the benefits of your newly improved home and be glad you went to the trouble, even if you have to clean up some post-construction dust.

Fortunately, there are things you can do to make it easier, and one of the best ways is to figure out how to finance your projects well before you start them. While you’re thinking of creative ways to finance a home renovation, keep in mind that a personal loan from Discover is one of the easiest ways to get started.

You can apply online in minutes and receive a loan of up to $40,000 with a fixed interest rate, a choice of repayment terms, and no fees as long as you pay on time.Learn More about Home Remodel Loans