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Home improvement projects are by no means cheap, especially if you want your renovation or addition completed properly. For many property owners, however, dealing with the associated costs proves to be a major challenge.

Taking out a personal loan could be a highly effective means of funding your home improvement. Fortunately, there are many different lending options to choose from.

How Can You Use Personal Loans for Home Improvement?

Most personal loans are unsecured, or made without any other guarantees besides your word that you’ll repay what you owe. They don’t require you to use your home or other assets as collateral, so they’re ideal when you lack home equity but still want to make improvements.

The Realities of Personal Loan Interest Rates

Of course, easy access and minimal requirements don’t mean that personal loans are flawless. Since creditors can’t take a borrowers’ property as a penalty for nonpayment, they often offset their risks by charging higher interest rates than they would with secured lending terms.

Depending on the nature of your project and the amount of money that you need to borrow, however, increased interest may be a nonissue. If you’re smart about repaying as quickly as possible, you probably won’t even mind the fact that you can’t deduct the unsecured interest from your taxes.

Getting Your Home Improvement Project Moving With a Personal Loan

Not sure about where to start applying for a loan? Many different providers offer lending that you can use for home improvements, including:

The Federal Housing Administration

The Department of Housing and Urban Development, or HUD, facilitates a lending scheme known as the Title I loan insurance program. The government makes these loans available nationwide, doesn’t require security for amounts below $7,500 and mandates that sellers who offer funds obtain formal lender approval. Title I loans are streamlined, and you can use them for everything from permitting and inspection to purchasing architectural, engineering and construction services.

Some FHA-approved lenders also offer Energy Efficient Mortgages, or EEMs. After you obtain a home assessment from a qualified professional to identify potential energy-saving improvements, you can use these FHA-insured loans to complete the project. Homeowners depend on EEMs to pay for things like solar or wind power generation systems, weatherization upgrades and other forms of utility-saving modernization.

Bear in mind that government loans come with many requirements. Before jumping through all of the hoops necessary to apply for your home improvement financing, make sure that you understand the coverages and limitations of your chosen lending option.

State Veterans’ Associations

Your locale may offer financing advantages to veterans and active duty service members who want to renovate their properties or complete important material upgrades. States like California, Texas and others provide diverse home improvement loan terms that complement or extend existing programs.

State military home improvement loans are independent from the VA Home Loans that the U.S. Department of Veterans Affairs administers. VA Home Loans can also fund some forms of improvements, such as post-disaster restoration, but that’s not their primary purpose. Not all states maintain home upgrade lending programs specifically for veterans, so investigate what’s available to you beforehand.

Private Lender Loans

Although private lenders may participate in federal and state programs, many also provide proprietary personal lending products. It’s usually up to you what you do with these funds, so they represent a flexible source of home improvement capital.

When you work with private lenders, they’ll usually charge more interest, and you may have to prove your worthiness by adhering to rigorous credit standards. In many cases, you’ll also gain access to increased lending limits, however, so it’s usually possible to create a functional borrowing plan.

Lenders may offer widely varied terms to stay competitive. Always take the time to hunt for the best rates, and bear in mind that private lenders aren’t necessarily going to offer their services in every jurisdiction like federal programs do.

Can You Benefit From Personal Loans for Home Improvement?

Applying for personal loans isn’t the only means of funding your upcoming home improvement. For instance, many consumers depend on equity loans or credit cards to pay for renovations. Others refinance their earlier mortgages. All of these methods have unique pros and cons, so it’s wise to evaluate your options based on the particulars of your renovation.

Have you used personal loans for a home improvement or renovation? Share your story below, and follow us on social media for more insightful tips about making your finances work.