About the Home Improvement Loan Calculator
This home improvement loan calculator estimates the monthly payment and total cost of borrowing for a renovation — a kitchen remodel, new roof, bathroom, addition or energy upgrade. Enter the project cost, any cash you will put in, the rate and term the lender quotes, and the origination fee to see what you will actually pay each month.
Many personal and home improvement loans deduct an origination fee from the money you receive. The calculator grosses the loan up so you still receive enough to cover the project, then shows the true APR including that fee — the number to compare between lenders, home equity loans, HELOCs and contractor financing.
Renovations often add some resale value. Enter the share of the project cost you expect to recover when you sell to see the net cost of the project after the value it adds. Cost-recovery varies widely by project and market, so treat that figure as a rough guide.
With the default inputs, the monthly payment is $580.35. Change any value above to recalculate instantly.
How to use the home improvement loan calculator
- 1Enter the total project cost from your contractor quotes.
- 2Enter any cash you will put toward the project.
- 3Enter the lender’s interest rate, term and origination fee.
- 4Optionally set how much of the cost you expect to recover in home value.
- 5Compare the true APR and total cost across lenders and terms.
Formula and method
The amount you need is the project cost minus your cash. Because most lenders deduct the origination fee from the proceeds, the loan L is grossed up by dividing by (1 − fee) so that after the fee you still receive what you need. The monthly payment M uses the standard amortization formula with i = annual rate ÷ 12 and n monthly payments.
The true APR is the rate at which the payments you make exactly repay the cash you actually receive, found numerically; it is higher than the quoted rate whenever a fee is charged. Total project cost is your cash plus every loan payment, and net cost subtracts the resale value you expect the work to add.
- L
- Loan amount including the fee
- fee
- Origination fee as a decimal
- M
- Monthly payment
- i
- Monthly interest rate (annual rate ÷ 12)
- n
- Number of monthly payments
Worked examples
$40,000 remodel, $5,000 cash, 8.99% for 7 years, 3% fee
You need $35,000 after your cash. To receive that after a 3% fee you borrow $36,082.47. At 8.99% over 84 months the payment is about $580, total interest about $12,667, and the true APR including the fee is about 9.96%.
$15,000 roof, no fee, 5-year loan at 11.5%
With no fee the loan equals the $15,000 cost and the APR equals the 11.5% rate. Sixty payments of $329.89 cost $4,793.35 in interest.
Frequently asked questions
What is a home improvement loan?+
It is usually an unsecured personal loan used for renovations, with a fixed rate and term of about 2 to 12 years. Because your home is not collateral, rates are higher than a home equity loan or HELOC but you do not risk foreclosure.
Is a home equity loan better than a home improvement loan?+
Home equity loans and HELOCs usually have lower rates and longer terms, and interest may be tax-deductible when the money is used to improve the home. But they need equity, closing costs and an appraisal, and your home secures the debt.
How does an origination fee change the cost?+
A fee deducted from the proceeds means you pay interest on money you never receive. A 3% fee on a 7-year loan adds roughly one percentage point to the APR, so compare APRs rather than quoted rates.
Do renovations pay for themselves at resale?+
Rarely in full. Most projects recover only part of their cost in home value; smaller, practical upgrades such as a garage door or entry door tend to recover more than large luxury remodels. Local market conditions matter most.
What credit score do I need for a home improvement loan?+
Minimum scores vary by lender, and some approve fair credit, but the lowest advertised rates go to borrowers with good to excellent credit and a low debt-to-income ratio. Prequalifying with a soft credit check lets you compare real offers without affecting your score.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.