How Home Improvement Loans Over $100K Work: Types, Requirements, Process

Home improvement loans are financing tools designed to fund renovations, repairs, or upgrades.

Here’s how they work in practice: A lender evaluates your credit, income, and (for equity-based options) home value  to determine your loan amount and rate. You receive funds either as a lump sum or a line of credit. Then, you repay the loan over time at a fixed or variable rate, depending on the structure.

Renovation costs have climbed meaningfully. The average home remodeling project now costs about $61,565, according to our analysis of JLC’s Cost vs. Value Report, and upscale kitchen remodels can exceed $150,000.

At the same time, nearly 80% of homeowners hold mortgage rates below 6%, many having moved or refinanced when rates hit record lows during the COVID-19 pandemic. With current rates higher, moving often means forfeiting a favorable mortgage. Renovating in place has become the more rational financial decision—a trend highlighted in a recent S&P Global analysis.

However, funding a six-figure project by liquidating investments or selling assets can disrupt long-term plans. Strategic financing allows you to move forward with improvements while preserving liquidity and financial stability.

Choosing the right loan depends on your equity, timeline, budget certainty, and risk tolerance. Here’s a quick comparison:

Sources: Federal Trade Commission, The Mortgage Reports, USA.gov

Unsecured personal loans

An unsecured personal loan for home improvement does not require home equity or collateral. Instead, approval is based on credit strength, income, and overall financial profile.

These loans offer fixed monthly payments and defined repayment schedules. They’re often chosen when timing matters or when borrowers prefer not to tie renovation financing to their home.

While some lenders cap personal loans at around $50,000, others offer significantly larger amounts (BHG personal loans go much higher). In fact, BHG Financial provides unsecured personal loans of $100,000¹ or more, with funding available up to $250,000¹ for qualified borrowers. For substantial renovations, that capacity can allow the entire project to be completed at once rather than in stages.

Some lenders charge origination fees ranging from 1% to 8%. Reviewing the full cost—including APR and total repayment—is essential.

Read more: Maximum Personal Loan Amounts in 2025: Limits and Factors

Home equity loans

A home equity loan is a secured loan using your home as collateral. It provides a lump sum at a fixed rate with predictable payments. Lenders typically allow you to borrow up to 80% of your home’s value (combined with your existing mortgage). That usually requires at least 15% to 20% equity.

The upside of this financing option is the potential for lower rates than unsecured options for those with strong credit. However, the trade-off is collateral risk: the home secures the loan. Closing costs and appraisals also extend timelines and increase upfront expenses.

Home Equity Lines of Credit (HELOCs)

A HELOC is a revolving line of credit backed by home equity. You borrow as needed during a draw period, then transition into repayment. Payments can fluctuate with rate changes and how much you draw. You’ll also need sufficient equity and solid credit to qualify.

HELOCs can work well for phased renovations. But variability introduces uncertainty, and, like other secured options, your home serves as collateral. For example, when the Fed rate jumped in 2023, the HELOC rates jumped right along with it.

Read more: HELOC vs Personal Loan: Key Differences Explained

Cash-out refinancing

Cash-out refinancing replaces your current mortgage with a larger loan, paying out the difference as cash for home improvements. This may make sense when market rates are comparable to—or better than—your existing mortgage or when you have enough equity available to fund larger projects.

However, it resets your mortgage term and often increases total interest paid over time. Closing costs apply, and approval timelines can stretch several weeks.

Government-backed renovation loans (FHA 203(k) and others)

Government-backed renovation loans, such as the FHA 203(k) or Title 1, allow borrowers to finance the purchase and renovation together, subject to specific property and project qualification criteria. FHA Title I loans, for example, cap improvements at $25,000 for single-family homes and require approved contractors and primary residence status.

These programs may offer lower credit thresholds but come with strict guidelines, documentation requirements, and longer processing times.

Lenders price and structure home improvement loans based on collateral (if applicable), credit, income, equity, and overall risk.

Secured vs. unsecured loans

Secured loans (home equity loans, HELOCs, cash-out refis, and many government loans) use your home as collateral. Unsecured options (personal loans and some contractor financing) do not.

It’s common to assume unsecured loan amounts are significantly smaller than secured options. In reality, borrowing limits vary by lender. Some institutions offer unsecured financing well into six figures for high-income borrowers with prime credit—without altering an existing mortgage structure.

Loan amounts and interest rates

Secured products commonly allow borrowing up to 80% to 85% of your home’s value, minus your mortgage balance. So, if a home is worth $500,000 and your remaining mortgage balance is $250,000, your home equity is $250,000. With a lender’s total borrowing capacity at 80%, you could borrow up to $150,000.

Unsecured loan limits vary by lender. Some lenders cap personal loans at $50,000 or less. Others, like BHG Financial, offer unsecured loans up to $250,000¹ for qualified borrowers—designed for larger-scale projects.

Rates vary based on credit score, income stability, loan type, and market conditions. Fixed-rate personal loans provide payment certainty. HELOCs are variable and typically move with the market.

Collateral and appraisal requirements

Collateral is an asset a lender can claim if a borrower defaults. With secured home improvement loans, this is often your house. Most equity-based loans require an appraisal to confirm value and establish borrowing limits.

Lenders typically require borrowers to maintain about 15% to 20% equity (roughly 80% to 85% combined loan-to-value). Unsecured loans skip the appraisal process, which can shorten timelines and reduce hassle.

Repayment terms

Repayment terms generally range from two to 10 years for unsecured loans and 10 to 30 years for mortgage-related options.

Fixed rates provide predictable monthly payments. This structure is common with personal loans and home equity loans.

Sources: The Mortgage Report, Investopedia, USA.gov

Here’s how to get a home improvement loan:

Estimating project costs and planning financing

Begin with detailed contractor bids and a defined project scope. Compare anticipated costs against available savings and equity to determine how much financing is necessary—and how much cash reserves you want to keep on hand in the process.

Prequalification and documentation

Many lenders allow you to prequalify and view estimated rates without a hard credit inquiry. For this, you’ll typically need to provide income documentation and project details. Compare loan estimates to determine the best solution for your budget, project scope, and repayment timeline.

Read more: How to Choose the Best Personal Loan Lender (Especially If You’re a High-income Borrower)

Application and underwriting process

Once you identify your preferred lender, complete the application. Secured loans may require a property appraisal. Underwriting evaluates credit, income, debt obligations, and, if applicable, home equity.

Specialized lenders, such as BHG Financial, evaluate applicants holistically, which can be valuable for those with complex finances or fluctuating incomes. Plus, BHG’s concierge loan service streamlines the application process and tailors loan options to your needs.

Funding timelines and disbursement

Unsecured personal loans can be funded in a few days, and the funds are typically disbursed as a lump sum. Equity-based or government loans may take two to eight weeks due to appraisals and compliance checks. Funds arrive via escrow with contractor draws or through a revolving HELOC.

Ensure financing aligns with your priorities.

Matching loan types to project size and timeline

Start by confirming the loan structure can support your full project scope and desired timeline. For fixed-cost projects or big projects that are simply ready to start, an unsecured personal loan can be faster and simpler than tapping home equity. For large remodels you plan to complete in phases, a home equity loan or cash-out refinance may deliver lower rates—if you accept collateral risk and a longer timeline.

Total costs: Interest, fees, and closing expenses

Budget for interest, origination fees, closing costs, and potential prepayment penalties. Personal loan origination fees can reach 8%, but equity-based financing requires you to pay for a home appraisal and/or closing costs. Compare APRs and total repayment, not just the monthly payment.

Risks associated with using home as collateral

Secured loans like HELOCs and home equity loans put your property at risk if you default. While rates may be lower and limits higher, consider whether using home equity is worth the risk given your situation.

Impact on cash flow and credit profile

Longer terms lower monthly payments, which can help preserve liquidity during large renovation projects. However, the total interest is higher. Choose a repayment structure that fits your monthly cash flow and build in a safety margin to protect your credit and future borrowing power.

Financing isn’t the only option—but alternatives have trade-offs.

• Using savings or cash reserves: Avoids interest and fees but reduces liquidity and may interrupt investment growth. Large withdrawals can also limit flexibility if unexpected expenses arise.
• Contractor financing options: Some contractors partner with third-party lenders. Terms and rates vary widely, and promotional offers may convert to higher rates later. Verify the lender, fees, and terms before signing.
• Staged or phased renovation financing: Completing projects in stages can reduce borrowing needs but may increase total construction costs over time and extend disruption.

For homeowners seeking fast funding², fixed payments, and substantial borrowing capacity without placing their property at risk, BHG Financial offers unsecured personal loans up to $250,000¹ for qualified borrowers.

Explore personalized loan estimates and move forward with clarity and confidence. There’s no impact on your credit to explore rates.⁴

What types of home improvement loans are available?

You can finance a home improvement with unsecured personal loans, home equity loans, HELOCs, cash-out refinancing, and government-backed options such as the FHA 203(k).

What are the eligibility requirements for these loans?

You’ll typically need good credit and verifiable income to qualify for large loans. Equity loans often require at least 15% to 20% home equity, while some government programs allow lower credit and down payments.

How long does the funding process usually take?

Unsecured personal loans can be funded within several days; equity or government-backed loans often take two to eight weeks due to appraisals and more complex approval requirements.

Which home improvement projects qualify for loan funding?

Most lenders allow repairs, renovations, and value-enhancing upgrades. Certain government programs restrict luxury improvements. BHG trusts you with your money. The team will help you find a solution that meets your needs while maintaining flexibility in how renovation budgets are allocated.

How do I choose the best loan for my renovation needs?

Match the loan structure to project size, equity position, and urgency. For borrowers seeking speed, fixed payments, and large loan amounts¹ without placing their home at risk, an unsecured personal loan from BHG Financial may provide the flexibility to move forward confidently.