

5 Types of Home Improvement Loans: Which One Makes Sense for You?
NEW YORK, NY / ACCESS Newswire / March 26, 2025 / While home renovations are exciting, they don't come cheap. The good news is you can still improve your home without thousands of dollars of cash at your disposal. With a home improvement loan, you may receive the funds you need to complete just about any project.
Since there are several home improvement loans out there, it's important to compare your options and hone in on the ideal one. Here are five types of home improvement loans to consider.
1. Personal Loan
Many lenders offer personal loans that you can use to cover home improvement expenses. Since most personal loans are unsecured, you won't need collateral, like your house or car, to take one out. In some cases, you can apply online and receive the funds quickly, sometimes as soon as the same day you apply. And, you don't always need the best credit score to get approved. You can pre-qualify for a few personal loans online without impacting your credit and choose the best option.
2. Home Equity Loan
A home equity loan (HEL) lets you borrow against the equity you've built up in your home. Your home equity is the difference between the value of your home and what you still owe on your mortgage. Depending on the lender and your unique situation, you may borrow up to 100% of your equity-though it's more common to be approved for less. You'll get a lump sum of money upfront and may be able to score a reasonably low interest rate. You might also be able to deduct your interest. The only caveat is that you'll need sufficient home equity to go this route.
3. Home Equity Line of Credit (HELOC)
Just like a home equity loan, a HELOC uses your home equity. The difference, however, is that a HELOC works like a credit card. You can borrow as much or as little as you'd like up to a set credit limit that you're approved for. You'll only pay interest on the funds you withdraw rather than the entire amount you're approved for. A HELOC can be a great option if you're looking for a flexible loan because you're unsure of how much money your home improvement project will cost.
4. Cash-Out Refinance
A cash-out refinance is when you take out a new mortgage with a larger balance than what you currently owe. Then, you pay off your existing mortgage and pocket the difference. You can use the remaining cash to pay for a home improvement. Remember, you'll have to pay closing costs and refinancing restarts your loan term.
5. Credit Cards
A credit card can come in handy if you have a smaller home improvement project. It's convenient and may even earn you rewards, like cash back or travel points. A credit card is a smart move if you feel confident you'll be able to repay your balance in full at the end of each month. It might also be worthwhile if you're able to get a card with a 0% introductory offer. As long as you repay your balance before the intro period is up, you won't have to pay any interest.
The Bottom Line
Not all home improvement loans are created equal. That's why shopping around and exploring all your options is important. If you own a home with lots of equity, a home equity loan or HELOC might be your best bet. On the other hand, a personal loan is ideal if you don't want to put any assets on the line. A credit card can be a solid pick if you have a smaller project. Best of luck in your search for the perfect loan!
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SOURCE: OneMain Financial
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R.Collins--RTC