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Best Bad Credit Home Improvement Loans | Find the Best Loan for You

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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.

The Best Bad Credit Home Improvement Loans of 2021

Bad Credit Home Equity Loans for Home Improvement

Best for large loan amounts

Bank of America serves roughly 66 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.

Before You Apply

  • Mortgage types: fixed rate, Affordable Loan Solution, FHA, VA, ARM, home equity line of credit, fixed-rate refinancing, FHA refinancing, VA refinancing, cash-out refinancing, adjustable-rate refinancing, jumbo
  • Minimum FICO credit score: Not disclosed
  • Maximum loan amount: $2.5 million
  • Better Business Bureau rating: A+

Best Features

  • Bank of America has a wide variety of mortgage products.

  • The lender offers origination fee discounts for qualifying Bank of America and Merrill Lynch clients.

  • Home equity lines of credit have no annual, application or cash advance fees or closing costs.

  • Bank of America offers a first-time homebuyer program.

See full profile

Best for low down payment

PNC Bank is one of the largest U.S. banks, serving more than 8 million customers in all 50 states. PNC offers most types of mortgages.

Before You Apply

  • Mortgage types: fixed rate, FHA, VA, USDA, ARM, home equity line of credit, refinancing, medical professional mortgage program, jumbo, PNC Community
  • Minimum FICO credit score: Not disclosed
  • Maximum loan amount: $5 million
  • Better Business Bureau rating: A+

Best Features

  • Multiple types of mortgages are available.

  • Some mortgage options require no or low down payments.

  • PNC supplies an online home ownership cost tool.

See full profile

Best for fair credit

Flagstar offers banking and lending products in every state. Borrowers can select from conventional or government-backed mortgages, such as FHA, VA and U.S. Department of Agriculture loans, and opt for adjustable-rate mortgages. Other choices include home equity loans and lines of credit.

Before You Apply

  • Mortgage types: conventional, VA, ARM, FHA, USDA, jumbo, refinance, home equity
  • Minimum FICO credit score: Not disclosed
  • Maximum loan amount: $3 million
  • Better Business Bureau rating: A+

Best Features

  • Flagstar Bank provides a broad selection of mortgages and home equity loans.

  • Some mortgages require no or a low down payment.

  • Borrowers can apply for loans online.

See full profile

Best for conventional mortgage

Citizens Bank is a regional bank based in Providence, Rhode Island. It offers traditional banking services and products, including home loans and mortgage refinance loans.

Before You Apply

  • Mortgage types: conventional, ARM, refinance, HELOC, jumbo, fixed rate
  • Minimum FICO credit score: undisclosed
  • Maximum loan amount: undisclosed
  • Better Business Bureau rating: A+

Best Features

  • Citizens Bank provides a homebuying service with rewards for borrowers in select states.

  • Homebuyers can get an interest rate discount for qualifying automatic payments.

  • Borrowers can apply online.

See full profile

Bad Credit Personal Loans for Home Improvement

Rocket Loans

7.16% to 29.99% APR
$45,000 Max. Loan Amount
Not disclosed Min. Credit Score

Avant

9.95% to 35.95% APR
$35,000 Max. Loan Amount
550 Min. Credit Score

Upgrade

7.99% to 35.97% APR
$50,000 Max. Loan Amount
Not disclosed Min. Credit Score

Lender

Learn More
7.16% to 29.99% APR
$45,000 Max. Loan Amount
Not disclosed Min. Credit Score

Lender

Learn More
9.95% to 35.95% APR
$35,000 Max. Loan Amount
550 Min. Credit Score

Lender

Learn More
7.99% to 35.97% APR
$50,000 Max. Loan Amount
Not disclosed Min. Credit Score

Best for low minimum loan amounts

PenFed Credit Union serves members of the Armed Forces, Department of Defense, Department of Homeland Security, military associations, eligible veterans and retirees, and their families. However, military association is not required to apply for a loan or become a credit union member. The credit union offers personal loans for eligible members and eligible co-borrowers in all 50 states.

Before You Apply

  • Minimum FICO credit score: undisclosed
  • Loan amounts: $500 to $20,000
  • Repayment terms: up to 60 months
  • Better Business Bureau rating: A+

Best Features

  • Terms of up to 60 months.

  • There are no origination fees.

  • Borrowers can get access to funds as early as the day after approval.

See full profile

Best for digital customer care

Rocket Loans offers personal loans to qualified borrowers in all U.S. states except Iowa, West Virginia and Nevada. These loans are designed for people with fair to excellent credit who need to borrow up to $45,000 for debt consolidation, home improvements, medical expenses and business or other expenses.

Before You Apply

  • Minimum FICO credit score: undisclosed
  • Loan amounts: $2,000 to $45,000
  • Repayment terms: 36 to 60 months
  • Better Business Bureau rating: A+

Best Features

  • Same-day loan funding is available in some cases.

  • No prepayment penalties apply.

  • An online application process is available.

See full profile

Best for risky borrowers

Since 2012, Avant has provided access to personal loans to more than 800,000 borrowers nationwide. Borrowers may qualify with fair to excellent credit and can borrow from $2,000 to $35,000.

Before You Apply

  • Minimum FICO credit score: 550
  • Loan amounts: $2,000 to $35,000
  • Repayment terms: 24 to 60 months
  • Better Business Bureau rating: A

Best Features

  • Loans as low as $2,000 are available.

  • Funding can happen as early as the next business day after approval.

See full profile

Best for loan amounts of up to $50,000

Upgrade is an online lender that offers personal loans and lines of credits nationwide. Borrowers can qualify for up to $50,000 in financing.

Lender Highlights

  • Minimum FICO credit score: Not disclosed
  • Loan amounts: $1,000 to $50,000
  • Repayment terms: 36 to 60 months
  • Better Business Bureau rating: A+

Best Features

  • Loans and lines of credit are available up to $50,000.

  • Borrowers can complete the entire loan process online.

See full profile

What Credit Score Do You Need for a Home Improvement Loan?

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.

What Is the Best Type of Loan for Home Improvements

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.

Should You Get a Home Improvement Loan With Bad Credit?

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.

Advertising Disclosure: Some of the loan offers on this site are from companies
who are advertising clients of U.S. News. Advertising considerations may impact
where offers appear on the site but do not affect any editorial decisions,
such as which loan products we write about and how we evaluate them. This site
does not include all loan companies or all loan offers available in the marketplace.

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