Renovation Loan vs Personal Loan Comparison
Side-by-side: secured renovation loan (lower rate, longer term) vs. unsecured personal loan (higher rate, shorter term).
Result
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How to use this calculator
- Enter the amount needed.
- Get reno loan quote (HELOC, 203k, or HomeStyle).
- Compare to personal loan offers (LightStream, SoFi, Marcus).
- Look at both monthly cost and total interest.
About this calculator
Renovation loans (FHA 203k, Fannie Mae HomeStyle, or HELOC) are secured by the home, so rates are 5-9% with 10-30 year terms. Personal loans are unsecured at 10-25% APR with 3-7 year terms. The longer term on a reno loan means lower monthly payments but more total interest if rates are similar; lower rates flip that. Personal loans win when amounts are small ($5-15k) and you can pay off in <5 years — the rate premium is small in absolute dollars and you avoid origination + appraisal fees.
Frequently asked
When does the reno loan win?+
Larger amounts ($25k+) and you intend to pay over many years. The lower rate dwarfs origination costs.
When does the personal loan win?+
Small amounts and fast payoff. A $10k personal at 12% over 3 years can beat a $10k reno loan with 2% closing costs.
Can I deduct interest?+
Reno loan interest is deductible if used to "buy, build, or substantially improve" the home (per IRS Pub 936). Personal loan interest is not.
Does a personal loan affect my mortgage?+
It hits DTI ratio for any future refi or new mortgage. Reno loans secured against the home also do, but as part of housing debt.
What about 0% credit cards?+
For amounts under $5k that you can pay off in 12-18 months: cheapest of all. Just don't carry the balance past the promo or rates jump to 25%+.
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