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Payment on a $30,000 project by rate and term
| APR | 3 years | 5 years | 7 years | 10 years |
|---|---|---|---|---|
| 7% | $926.31 | $594.04 | $452.78 | $348.33 |
| 9% | $953.99 | $622.75 | $482.67 | $380.03 |
| 12% | $996.43 | $667.33 | $529.58 | $430.41 |
| 15% | $1,039.96 | $713.70 | $578.90 | $484.00 |
| 18% | $1,084.57 | $761.80 | $630.54 | $540.56 |
Rates in the table are examples to show the effect of rate and term, not offers. Your rate depends on credit score, income, debt-to-income ratio and whether the loan is secured by your home.
Longer terms cost more in total
| Term at 9% | Monthly payment | Total interest |
|---|---|---|
| 3 years | $953.99 | $4,344 |
| 5 years | $622.75 | $7,365 |
| 7 years | $482.67 | $10,544 |
| 10 years | $380.03 | $15,603 |
| 15 years | $304.28 | $24,770 |
Ways to pay for a renovation
- Unsecured personal loan: fixed rate and payment, fast funding, no lien on your home; rates are usually higher and some lenders deduct an origination fee from the loan.
- Home equity loan: fixed-rate lump sum secured by your home; usually lower rates, but closing costs and the risk of foreclosure if you cannot pay.
- HELOC: a revolving line secured by your home, typically variable-rate, with a draw period and a repayment period. Good for projects paid in stages.
- Cash-out refinance: replaces your mortgage with a larger one; makes most sense when the new rate is not much higher than your current rate.
- Credit card or 0% promo: only for small projects you can repay before the promotional rate ends.
Size the project first
Price the materials with our flooring, tile, drywall, paint and roofing calculators, get written contractor quotes, then add 10–20% as a contingency before you decide how much to borrow.
Background: CFPB: What is a HELOC?; FTC: Home equity loans and lines of credit. Payment formula: standard fixed-rate amortization; effective APR includes the origination fee.
Related
Frequently asked questions
What is the monthly payment on a $30,000 home improvement loan?
About $622.75 at 9% for 5 years, or $380.03 over 10 years.
How does an origination fee change the cost?
If the lender deducts a 5% fee, you must borrow about $31,579 to receive $30,000, so the payment rises to $655.53 and the effective APR rises above the note rate.
Is a home improvement loan tax deductible?
Interest on an unsecured personal loan is generally not deductible. Interest on a home equity loan or HELOC can be deductible when the money is used to buy, build or substantially improve the home that secures it, subject to IRS limits; check IRS Publication 936.
Should I choose a shorter term?
A shorter term raises the monthly payment but cuts total interest sharply. Pick the shortest term whose payment fits your budget comfortably.