How to Finance a Home Remodel

Key insights:

• Personal loans are unsecured loans you can use to fund home renovations without putting your home up as collateral
• These loans typically offer fixed interest rates and set monthly payments, which may make budgeting for your project easier
• Alternatives like a home equity line of credit and a cash-out refinance use your home’s equity, but may take longer to approve

If you’ve been putting off a home repair or remodeling project, you’re not alone. According to Harvard University’s 2025 Improving America’s Housing Report, nearly half (49%) of all home improvement spending in 2023 — about $197 billion — went toward essential upgrades for safety and functionality. When repairs can’t wait, figuring out how to pay for them might be your next step.

A personal loan, which is typically unsecured, can be used for almost any purpose and may offer the quick funds you need for renovations and repairs. Before applying for one, let’s explore how personal loans for home improvement work, as well as their benefits and possible alternatives.

How to get a home improvement personal loan

When you’re applying for a personal loan, you may see some lenders label it as a “home improvement loan.” Typically, though, it’s a standard personal loan. The application process is usually straightforward and can often be completed online or in person. Here’s what you may need to provide:

• Full legal name
• Address
• Date of birth
• Phone number and email
• Social Security number

Whether you’re making minor updates or major renovations, personal loans can provide the funds you need to improve your home while offering predictable repayment terms. Always compare the terms and conditions of different lenders to find the most suitable option for your financial situation.

The maximum amount you can borrow depends on your financial profile, including your income and credit score. Different financial institutions offer different limits. For example, Citi offers personal loans of up to $30,000 to qualified applicants. The term — the length of time you have to repay the loan — can also vary depending on the loan amount. Citi, for instance, offers terms of up to 60 months (5 years).

If you’re approved, you’ll receive the funds as a lump sum. Since personal loans usually have fixed interest rates, your monthly payment remains the same throughout the life of the loan. This predictability can be helpful when managing your budget and renovation costs.

How can you use a personal loan for home improvement?

One defining feature of a personal loan is its flexibility. Once the funds are in your account, you can use them for almost any aspect of your renovation project.

Common projects financed with personal loans include:

• Landscaping: Installing a new patio or walkway
• Kitchen and bathroom remodels: Updating cabinets or fixtures
• Necessary repairs: Fixing a roof or upgrading an HVAC system
• Replacing large appliances: Purchasing a new refrigerator or dryer

Benefits of using a personal loan for home renovation

For some homeowners, a personal loan can offer distinct advantages over other financing types. Some benefits include:

• Receive funds quickly: Unlike home equity products that can take weeks to close, personal loans often fund much faster, sometimes within a few days of approval. This is ideal if you have an emergency repair or a contractor ready to start immediately.
• Straightforward, simple application process: There is usually less paperwork involved compared to secured loans, as there is no home appraisal required.
• No need to put up collateral: Since the loan is unsecured, you don’t risk losing your home if you encounter financial difficulties, though your credit score would still be impacted by missed payments.
• Payments stay the same: With a fixed interest rate and term, you know exactly how much you'll pay each month, which simplifies budgeting during a chaotic renovation.

Since you receive a personal loan as a single lump sum, it may be easier to use for one-time projects where you have a clear estimate of the total cost. However, if you’re facing a project with an open-ended timeline or unclear costs, you may consider alternative funding sources.

Alternatives to using a personal loan for home improvements

Depending on your financial situation and the scope of your project, other financing methods might offer different benefits, such as lower interest rates or higher borrowing limits. Here are other ways to pay for a home remodel.

Cash-out refinance

A cash-out refinance involves replacing your existing mortgage with a new one that has a higher balance than what you currently owe. You receive the difference between the 2 loans in cash, which you can then use for your renovations.

This option allows you to leverage your home's equity and potentially get a lower interest rate than you had with your previous mortgage. However, it also means resetting your mortgage term and paying closing costs.

Home equity loans

A home equity loan is a type of secured loan where your home serves as collateral. Like a personal loan, it provides a lump-sum payout and usually has a fixed interest rate. It can be a good choice if you have significant equity in your home and need a large amount of money for a major project, like an addition. Because the loan is secured by your property, interest rates may be lower than another type of loan.

Home equity lines of credit

A home equity line of credit (HELOC) is another form of secured financing. Instead of a lump sum, a HELOC gives you access to a revolving line of credit for a set draw period. During this time, you can borrow what you need up to your limit and usually make interest-only payments. Once the draw period ends, you enter the repayment period.

A HELOC offers flexibility if you’re unsure of your total project costs or timeline. You only pay interest on the amount you actually borrow, not the total credit limit.

Credit cards

For smaller, quicker home updates, using a credit card might make sense. It can provide immediate access to the funds you need, and you can pay off the full statement balance by the due date to avoid interest charges. Credit cards may also offer points for cash back or miles, as well as a low promotional APR on purchases for a specific period.

Cash or savings

If you have sufficient funds in a savings account, you might consider paying for a home improvement in cash. With cash, you avoid paying any interest and taking on additional debt. Using your savings may make sense if the renovation isn’t urgent and you have time to save, or if you need more funding in addition to your personal loan.

Should I finance home improvements with a personal loan?

Choosing the right financing method depends on your unique financial situation and planned renovation. A personal loan for home improvement may be the right choice if you:

• Can easily fit the monthly payments into your budget: You can handle the repayment timeline (typically up to 5 years) without financial strain.
• Know how much you will need: You have a solid estimate from your contractor to ensure you borrow enough to cover the work.
• Are considering a low- to medium-cost project: You might prefer to use cash or credit cards for smaller projects and to tap into your home’s equity for larger ones.

Find a personal loan for your next home remodel project

Taking out a personal loan for a home improvement project can be a practical way to create a more comfortable and functional living space for you and your family.

Citi offers personal loans to both existing and new eligible Citi customers. Explore how Citi personal loans can help you achieve your remodeling goals.

Home improvement loan FAQs

What is the best way to finance a home remodel?

The best financing option depends on your budget and goals. Personal loans, home equity loans and savings are common choices.

What is the 30% rule in remodeling?

The 30% rule suggests not spending more than 30% of your home’s current value on renovations. Some experts recommend using this benchmark to ensure you don’t over-invest compared to the property’s worth.

Is $50,000 enough to renovate a home?

It depends on the project’s scope and the size of your home. For smaller updates or mid-sized renovations, $50,000 may be sufficient, but major remodels could require additional funds.

This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.