Late summer and early fall can be a great time to make the home improvements, repairs or additions you’ve been thinking about. And if you’re considering how you’ll cover those expenses, a personal loan might fit the bill.
Learn more about how personal loans work, what projects they’re best for and what the application process looks like in this blog.
What is a personal loan?
Like a home loan, a personal loan provides you with a lump sum of cash upfront. But unlike a mortgage loan, the money can be put toward almost anything you want, whether you’re adding a deck, replacing the roof or putting on solar panels.
Generally speaking, most personal loans are unsecured, meaning you don’t use your home or other assets as collateral. They also typically offer a fixed annual percentage rate (APR), so interest rates won’t fluctuate over the life of the loan. Timelines for personal loans usually range from two to seven years.
Benefits of a personal loan vs. other options
Credit cards are convenient, but they’re rarely the cheapest way to fund a home improvement project. Card rates for carried balances can be high, and minimum payments stretch repayment out for years while interest keeps compounding. A personal loan, by contrast, comes with a fixed rate and a fixed payoff date, so you know exactly what you’ll pay in interest and when the debt is gone.
Draining your savings can feel like the “free” option since there’s no interest involved, but it comes with its own cost: liquidity. Home projects have a way of running over budget, and an emptied emergency fund leaves you with nowhere to turn if something else comes up. A personal loan lets you keep your cash reserves intact and earning interest, while spreading the cost of the project into predictable payments you can plan around.
“We see it all the time — someone puts a $15,000 renovation on a credit card meaning to pay it off fast, and eighteen months later they’re still chipping away at it. A personal loan gives you a real end date. That’s not just a numbers thing; it’s peace of mind,” said Alison Lathey, VP of Lending at Fidelity Federal.
How much can I borrow?
Personal loans can technically range anywhere from $1,000 to $100,000. However, the average loan is about $21,000.
To determine how much you’re eligible for and your interest rate, lenders will look at your personal credit score, income and debt-to-income ratio. A few questions can help you land on the right number to borrow.
- What will the monthly payment be, and does it comfortably fit your budget? A common guideline is keeping new loan payments, combined with your other debt, under roughly 35–40% of your gross monthly income.
- Will this project add value to your home? Kitchens, bathrooms, and energy-efficiency upgrades (windows, insulation, HVAC) tend to hold value better than highly personal or trend-driven projects. That doesn’t mean you shouldn’t do the fun stuff — just factor it into how much you’re willing to finance versus pay for in cash.
- Could you fund part of it with savings? Borrowing only what you actually need, rather than the maximum you’re approved for, keeps your total interest cost down and your monthly obligation lighter.
How to shop for a personal loan for home improvement
Rates for home improvement loans vary widely, often anywhere from the high single digits to well into the 30% range, depending mostly on your credit score, income and the size and term of the loan. That’s why it’s worth comparing offers rather than accepting the first one you see.
Before you apply, be sure you understand your credit score. Knowing your score helps you gauge what rates you’re likely to qualify for and flags any errors worth disputing first.
It’s also a good idea to get pre-qualified where possible. Many lenders can give you an estimated rate with a soft credit check that won’t affect your score, so you can compare real numbers rather than advertised “starting at” rates.
Next, compare the full cost, not just the rate. Look at origination fees, prepayment penalties (or lack thereof) and the total repayment amount, not just the APR.
Finally, consider your existing relationship with a lender. Banks and credit unions where you already have accounts understand your needs and can offer a smoother approval process.
“The rate you see advertised isn’t necessarily the rate you’ll get — it depends on your credit, your income and the term you choose. That’s exactly why we sit down with customers and walk through actual numbers instead of just quoting a range,” said Lathey. “We’d rather you understand the loan than just sign it.”
Ready for a personal loan?
A personal loan can be a straightforward, flexible way to finance a home improvement project, with no collateral required, a fixed payment and funds often available quickly. The best outcomes come from borrowing an amount tied to a realistic project budget, choosing a term that balances monthly affordability against total cost and comparing more than one offer before signing.
If you’re weighing a home improvement project and want to talk through what borrowing options might look like for your specific situation, Fidelity Federal is here to help. One option to consider is our share loans, which are personal loans that use your savings at Fidelity Federal as collateral. You may borrow up to 90% of your account balance, and you’ll pay a low interest rate on the borrowed amount.
With real lenders who live in Delaware and understand the local market, we can put together the best plan to make your dreams a reality. Contact Fidelity Federal
