Best Roof Financing

If your roof is leaking, caving in, or simply letting conditioned air escape, repair or replacement isn’t optional — it’s necessary. It can also be expensive. If you don’t have the money to pay upfront, you can finance the work through a personal loan, home equity loan, or other options. LightStream offers the best personal loans for roofing, with no origination fees, same-day funding, and loan amounts up to $100,000 for home improvement projects.

We'll cover the best roof financing options available and walk you through the pros and cons of roof loans, how to get one, and how to lower your rate.

Compare interest rates for roof financing

Best roof financing loans

Personal loans and home equity loans each offer years-long repayment terms and lower average interest rates than credit cards. Home equity loans, however, may not be suitable for emergency roof repairs or replacement, as they can take a month or more to close. You'll also need sufficient home equity to qualify. For these reasons, we've considered personal loans exclusively when determining the best loans for roof repairs and replacement.

What is a roof loan?

A roof loan is any type of loan that covers the cost of roof repair or replacement. Home equity loans and lines of credit along with personal loans and credit cards are go-to options for roof financing. But some are better than others, depending on how big of a job your roof repair or replacement is and what you can qualify for. 

Ways to finance roof repairs and replacement

Personal loan

Personal loans are best if you don't have home equity, would prefer not to use it as collateral on a loan, or if you need to repair or replace your roof ASAP. 

Most personal loans are unsecured and don’t require you to put up collateral. Not only does this keep your home free and clear of another mortgage, but it also means closing costs can be low (no appraisal fee) and money can be available within days (or less for same-day personal loans). Loan funds are deposited in your bank account and you can use the money to pay your contractor. Over the next several years (depending on the terms of your loan), you’d make monthly payments to the lender until you’ve repaid the amount borrowed plus interest.

Rates can be as low as 6.49%, but are generally only available if you have excellent credit. With good credit, you can expect rates in the mid-teens, depending on the length of the repayment term. With fair credit, expect rates in the mid- to high-20s. 

Home equity loan

If you’ve built up enough equity in your home, you may be able to borrow against it with a home equity loan. Unlike a personal loan, a home equity loan is considered a “second mortgage,” meaning your house serves as collateral on the loan. And since the value of your home needs to be appraised, these loans can take weeks longer to close than unsecured loans. 

The benefit is that home equity loans typically have lower interest rates than personal loans, especially if you have a "good" or “very good” FICO credit score (between 670 and 799).  Repayment terms are longer as well — up to 30 years, in some cases — which makes for a low monthly payment. The flipside is that even with a lower interest rate, a longer repayment term could mean thousands more spent in interest. Home equity loans are best if you have a big roofing job that you can wait to start.

Compare: Personal Loan vs. Home Equity Loan

Home equity line of credit

Similarly, a home equity line of credit (HELOC) lets you borrow against the equity in your home. In this case, however, you’ll have an open line of credit from which you can borrow as needed during the draw period (often five to 10 years). Most lender only require that you make interest payments during that time as well. The draw period is followed by a repayment period (often up to 20 years), when you'll pay back both the principal borrowed and interest.

HELOCs are helpful if you’re funding various home improvement projects over a few years. Like home equity loans, they tend to have lower interest rates than personal loans, but they can take longer to fund, require a certain amount of home equity, and use your home as collateral.

Compare: HELOC vs. Personal Loan: Which To Choose

Government loans and grants

Low-income homeowners may be able to finance a roof repair or replacement with help from agencies such as the Federal Housing Administration (FHA) or the U.S. Department of Agriculture (USDA).

• FHA Title 1 property improvement loans: These federally-insured loans allow low- and moderate-income homeowners to hire contractors to perform home improvements (or conduct the home improvements themselves). Homeowners can borrow up to $7,500 without any collateral, though you can borrow more (depending on the type of home) with your home as collateral. Max loan terms range from 12 to 20 years (again, depending on the type of home).
• FHA 203(k) loans: These loans can be used to finance major and minor home repairs. If your roof will cost less than $35,000 to replace or repair, you may be eligible for a limited 203(k) mortgage, or a streamlined version. Repairs in excess of $35,000 may be funded through the standard 203(k) mortgage.
• Single Family Housing Repair Loans and Grants (Section 504 Repair): This USDA program provides loans and grants to eligible low-income homeowners for home repairs. Loans have 20-year terms at 1% interest, with a maximum amount of $40,000. Grants, which are available only to those age 62 or older, have a lifetime limit of $10,000 and can be used only for the removal of health and safety hazards.

Credit cards

Paying for major expenses with a credit card can be expensive if you’re unable to pay off all the charges before your next due date. Credit cards typically have high, variable interest rates, and your debt will continue to climb each month if you make only minimum payments. Think of your credit card as a last resort, unless you can pay off the expense within a month.

One exception, however, is if you qualify for a 0% APR promotional period. Promotional or introductory periods may last up to 21 months, during which time you could potentially pay off all roof-related expenses interest-free. Just be careful with 0% APR financing offers. It’s imperative to repay the loan before the APR adjusts to avoid paying interest at the card’s standard APR, which could be around 30% or higher. 

Compare: Personal Loan vs. Credit Card: Which Is Better?

Contractor financing

Many contractors offer their own financing, either in-house or through third-party lenders. While it never hurts to explore your options, you should always compare their offers against what you could get from lenders on your own.

Savings

A major roof repair or replacement is definitely a good use of the money in your emergency fund, if you have one. Rather than finance roof repairs and pay interest, take the money out of your savings account to cover the cost, then focus on replenishing your savings before the next emergency expense.

Related: How To Save Money: Strategies for Every Budget

Pros and cons of personal loans for roof financing

Financing your roof with a personal loan carries several advantages, but there are some negatives to weigh before applying for a personal loan to cover roof costs.

Pros

• No collateral needed: While you can get a secured personal loan with collateral if you have poor credit, most personal loans are unsecured, which means you don’t have to offer collateral, such as your home (like a mortgage) or vehicle (like a car loan).
• No equity needed: Unlike home equity loans or home equity lines of credit (HELOCs), personal loans don’t require you to borrow against the equity in your home. This makes them a great option if you haven’t built up much equity.
• Fast funding: Unlike home equity loans or HELOCs, which can take a month or longer to fund, many personal loan lenders can have money deposited into your bank account within a few days of approval. Some of the best personal loans have same-day funding.
• Fixed interest rates: Personal loan rates have fixed interest rates, which means you know exactly how much you’ll spend each month and over the course of the loan.
• Lower rates than credit cards: Personal loans have much lower rates than credit cards — 2-year personal loan rates averaged 11.57% compared to 21.16% for credit cards, according to the latest Federal Reserve data.

Cons

• Interest rates: While personal loan interest rates are typically more competitive than those of high-interest credit cards, they’re still usually higher than rates for other financing options, such as home equity loans.
• Initial credit score impact: Applying for a personal loan typically results in a hard inquiry on your credit report, which can temporarily lower your credit score. A personal loan also increases the amount of debt you owe overall, which can adversely affect your credit score as well.
• No tax deduction: Unlike a home equity loan or HELOC, you can’t usually deduct interest on a personal loan, even when used for home improvements. 

How to compare roofing financing options

When comparing personal loans for financing your roof repair or replacement, consider a few key factors:

• Review eligibility requirements: Although specifics vary by lender, requirements for a personal loan typically include having a minimum credit score and minimum income, along with a positive credit history. 
• Review collateral requirements: Most personal loans, including home improvement loans, are unsecured and don’t require you to pledge collateral such as your car or your home. However, home equity loans and lines of credit require that you secure the loan with your home, which could put it at risk if you miss payments.
• Compare annual percentage rates (APRs): Personal loans, credit cards, and other forms of credit typically express the cost of borrowing through the annual percentage rate, or APR. The APR includes the interest rate plus any upfront fees, such as an origination fee. A lower APR is generally better, as long as you can afford the monthly payment.
• Consider repayment terms: Personal loan repayment terms typically range from two to seven years, although some lenders offer shorter or longer terms. For instance, LightStream offers terms between two and 20 years for home improvement loans. Home equity loans and HELOCs have terms up to 30 years. The length of the repayment term affects the size of your monthly payments and your total interest costs over the life of the loan.
• Look at loan amounts: Get a quote from your contractor so you know how much the job will cost. Then make sure any lender or loan you’re considering allows you to borrow that much. Rule out any options with maximum borrowing amounts below the price of the roof replacement.
• Weigh funding time: You can typically get a personal loan within a few business days after you’re approved, while home-equity loan options can take weeks or months to close. If you need an emergency roof repair or replacement, prioritize lenders that offer same-day approval and funding.

How to apply for a roof loan

Is a personal loan the right strategy for financing your roof repairs or replacement? Here’s what to do:

1. Research lender eligibility requirements: Before you get started, use Credible’s free credit monitoring tool to see your credit score and know whether you meet a lender’s credit score minimum. Then, check eligibility requirements with at least a handful of lenders to give yourself multiple options. 
2. Prequalify: Personal loan prequalification can help you get a sense of rates and terms you might qualify for. Prequalification won’t hurt your credit score, but it's not an offer of credit. You'll need to apply for the loan to see the rates and terms offered. Once you apply, the lender typically conducts a hard credit check, which may lower your credit score by up to 10 points for a period of up to a year.
3. Compare lenders: Once you’ve found lenders you might qualify with, compare them based on factors such as the interest rate, fees, loan amounts, repayment terms, funding speed, and customer service.
4. Apply online: Most lenders have an easy online application process. You’ll need to supply some paperwork, including proof of identity and proof of income (such as bank statements, 1099s, W-2s, and pay stubs). 
5. Wait for funds: If you’re approved, it may take a few business days to receive your funds (typically via direct deposit into your bank account). Some lenders offer faster funding, such as same-day or next-business-day funding.
6. Start repaying the loan: To protect your credit score, it’s crucial you make all on-time payments. Set reminders in your phone and schedule automatic payments if the lender offers that option. Some lenders offer a small interest rate discount if you set up autopay.

Methodology

Credible evaluated 32 lenders across 1,216 data points to find the best personal loans for roof financing. Lender star ratings were established based on the following weighted categories:

• Rates and fees: 18.75%
• Eligibility and options for bad and no credit: 17.5%
• Availability: 12.5%
• Loan amounts and terms: 10%
• Customer satisfaction: 10%
• Customer service: 10%
• Efficiency and fund delivery: 10%
• Discounts: 7.5%
• Credible proprietary data: 3.75%

Credible's team of experts gathered information from each lender's website and from our partners directly. We also considered each of our partner lenders' statistics over a 12-month period — including average funding times, average credit scores for approved applicants, and average rates. Each data point is verified by a senior editor to make sure it's accurate at the time of publication.

Learn more about how Credible rates lenders by exploring our personal loans lender rating methodology.