How can you get a home improvement loan with no equity?

You can get a home improvement loan with no equity by applying for an unsecured personal loan. You can use a personal loan for almost anything, including home improvements, so it can be a useful way to complete your projects without risking any collateral.

Personal loans base eligibility on your credit history, income, and debt, so you don’t need to own property worth a certain amount of money to take one out. Only home equity loans and home equity lines of credit require the borrower to use the equity in their home.

Tips for Getting a Personal Loan With No Equity for Home Improvements

• Check your credit score. You’ll need a credit score of 580 or higher to get most personal loans. Some lenders don’t have a minimum credit score requirement, though.

• Get prequalified. Use WalletHub’s prequalification tool to check your best options for approval and compare available rates and terms based on your credit score, income, and other factors. 

• Compare offers. Use WalletHub’s rate comparison tool to compare estimated monthly payments, APRs, fees, and loan terms. This can help you get the most affordable loan without needing any equity. 

• Plan. Make sure that you can cover the cost of the loan’s monthly payments in your budget to avoid defaulting on your loan.

• Apply. Once you’ve picked your provider, you can apply online or in person. Many banks and credit unions give you the option to do either, while some lenders are online-only. 

• Get funding. Some online lenders offer funding as fast as the same business day, while banks and credit unions usually provide the money within 1 – 4 business days. 

Other Ways to Get Home Improvement Loans With No Equity

• Get a secured personal loan.If you’re willing to put up something other than your home as collateral (e.g., a car, stocks, or money in a bank account), you can take out a secured personal loan even with a low credit score. These loans may have lower APRs than unsecured personal loans, but if you default, the lender can take away your collateral.

• Get a government-backed home improvement loan.The U.S. Department of Housing and Urban Development insures property improvement loans of up to $25,000 for a single-family home or $60,000 for a multifamily structure, making it easier to get approved. These are called FHA Title 1 loans and don’t require you to own any equity.

However, there are both pros and cons to getting a home improvement loan with no equity. The biggest benefit is that you won’t risk losing your home if you default on your loan. You’ll also likely get quicker approval and funding timelines if you apply for a personal loan rather than a home equity loan.

Drawbacks to getting a home improvement loan with no equity include the fact that you may not be able to borrow as much as you could with a home equity loan. You’ll also likely have a much higher APR with a personal loan than a home equity loan.