There are plenty of home improvement loans with no equity needed. Only home equity loans and home equity lines of credit require the borrower to use the equity in their home. The best way to get a home improvement loan with no equity is by applying for an unsecured personal loan. Personal loans base eligibility on your credit and income, so you don’t need to own property worth a certain amount of money to take one out. And you can use personal loans for home improvements or pretty much anything else. That’s not your only option, though.
How to Get Home Improvement Loans with No Equity:
Take out an unsecured personal loan. You’ll usually need a credit score of 660+ to get an unsecured personal loan, but some lenders accept applicants with scores as low as 585. These loans have absolutely no collateral.
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 bad credit. These loans tend to have lower APRs than unsecured personal loans, but if you default the lender can keep your collateral.
Get a government-backed home improvement loan. The government offers a few loan options that don’t require any equity. The U.S. Department of Housing and Urban Development helps insure property improvement loans of $7,500 or less. These are called FHA Title 1 loans. If you’re a veteran, you can also look into a renovation loan through the Veterans Administration.
All in all, if you don’t have any home equity, there are still plenty of avenues for you to pursue. A personal loan is probably the most convenient.
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 because you won’t be able to secure a loan with it. 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 much higher APRs if you get your home improvement financing through a personal loan rather than a home equity loan.
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