Simpler to get. Usually more expensive to carry.
Not every project needs a mortgage product. For a smaller job, a personal loan can be quicker and simpler than borrowing against your house. And plenty of people put part of a remodel on a credit card.
Both can make sense. Both can also turn a reasonable project into an expensive one if you don’t look at the rate.
A personal loan gives you a lump sum up front that you repay in fixed monthly installments over a set term, as the CFPB describes. Most are unsecured, meaning your house isn’t the collateral. Terms commonly run two to seven years.
Lenders often market these as “home improvement loans.” In most cases that’s just a personal loan with a different name.
The appeal is speed and simplicity. There’s no appraisal and no lien on your home, and many online lenders fund within a day or two of approval.
Because the lender has no collateral, you pay for that risk in the rate. The Federal Reserve reported an average of about 11.9 percent on 24-month personal loans at commercial banks in the second quarter of 2026, per its G.19 consumer credit release. Your rate depends heavily on your credit. Strong credit can do much better than that. Weaker credit can do a lot worse, well into the 20s or 30s.
Many personal loans also charge an origination fee taken out of the loan amount. Compare the APR, which includes fees, not just the interest rate. The CFPB suggests getting offers from several lenders.
Compare that with the options secured by your home. A HELOC or home equity loan usually carries a noticeably lower rate. On a large project, that difference adds up fast.
For a bathroom refresh or an exterior repair, it may be worth comparing. For a $200,000 addition? I’d want to understand my home equity and renovation loan options before automatically financing that amount with unsecured debt.
For an entire remodel? I would be extremely careful.
The Federal Reserve’s same release put the average credit card rate at about 21 percent in mid-2026, and about 22 percent on accounts actually paying interest. Carry a $30,000 balance at that rate and it becomes a very expensive $30,000 renovation.
A card can be useful for purchases you were already going to make and can pay off quickly, like fixtures, appliances or materials you’re buying yourself. Paying it off in full each month avoids interest entirely.
Don’t finance a six-figure construction project one swipe at a time because nobody made a financing plan.
These sound the same. They aren’t.
With a 0% intro APR, no interest builds up during the promotional period. Whatever is left at the end starts accruing interest from that point.
With deferred interest, the offer usually worded “no interest if paid in full,” interest is quietly calculated from the day you bought. If there’s any balance left when the promotion ends, all of that back interest gets added at once. The CFPB’s example: pay off $400 over 12 months at $25 a month and you’d owe $100 at the end under a 0% offer, but $165 under deferred interest.
Home improvement store cards commonly use deferred-interest promotions. Read the terms, and if you use one, pay the balance off before the deadline.
Some contractors offer financing through an outside lender. It can be convenient, but look closely at the price. Some of these programs charge the contractor a “dealer fee” that gets built into what you pay. The CFPB found these fees in solar financing commonly ran 10 to 30 percent of the cash price, in a 2024 report.
Ask for two numbers: the cash price and the financed price. The Federal Trade Commission also advises never agreeing to contractor-arranged financing without shopping around.
For the record, Smego Construction doesn’t sell financing and doesn’t make anything on the loan you choose.
It’s a lesser-known option. HUD’s Title I Property Improvement program insures fixed-rate home improvement loans through approved lenders. It’s aimed at owners with limited equity. Loans over $7,500 have to be secured by the property, and the single-family limit has long been $25,000. Few lenders offer them, so check HUD’s list of approved lenders if it sounds like a fit.
Interest on a personal loan or credit card isn’t deductible. Home-secured debt used to buy, build or substantially improve your home can be, under IRS Publication 936, if you itemize. For a big project that can tip the comparison further toward borrowing against your house. Ask your tax preparer.
Is a home improvement loan the same as a personal loan?
Usually, yes. Most loans marketed as home improvement loans are unsecured personal loans with a fixed rate and term.
Is it better to use a personal loan or a HELOC for a remodel?
For a small project, a personal loan can be simpler and faster. For a larger one, a HELOC or home equity loan usually costs less because it’s secured by your home, though it puts the house on the line and takes longer to open.
Should I put my remodel on a credit card?
Only for amounts you can pay off quickly. Average card rates were around 21 percent in 2026, and deferred-interest promotions can charge all the back interest if any balance remains when the promotion ends.
This page is general information, not financial advice. Smego Construction is not a lender, mortgage broker or financial advisor, and nothing here is a recommendation about your particular circumstances. Loan products, eligibility and terms change and vary by lender — confirm anything here with a qualified lender before making a decision.
Fifteen minutes on the phone. You’ll have a realistic range before we hang up — and if we’re not the right people for it, I’ll tell you.