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    Can You Use a Home Equity Loan for Home Improvements?

    Updated: March 10 2026 • 6 min read

    Written by Bennett Leckrone
    Bennett Leckrone

    Written by
    Bennett Leckrone
    Writer / Reviewer / Expert

    Bennett Leckrone is the editorial manager and an analyst for Lower. He specializes in making complicated mortgage topics accessible for consumers. That includes both in-depth product guides and in-depth analysis on what economic moves mean for homebuyers and refinancers. He was previously a business reporter with a focus on higher education and fintech at BestColleges. In that role, he reported on the development of fintech and AI curriculum, as well as the rapidly changing nature of finance education. He also wrote guides to help business students navigate AI and online education. He also reported on state politics at Maryland Matters, with a focus on how policy affected people and businesses. He holds a bachelor of science in journalism degree from Ohio University.
    Reviewed by Jake Driscoll
    Jake Driscoll

    Reviewed by
    Jake Driscoll
    Reviewer

    Jake Driscoll is an experienced loan advisor and trainer who specializes in simplifying the mortgage process for both homebuyers and loan officers. He’s an expert in all things mortgage and refinance, and currently serves as the Associate Vice President for Training and Development at Lower. In that role, he prepares aspiring loan officers for the NMLS SAFE Exam and serves as a mentor to loan officers across Lower. As an expert reviewer, Jake evaluates mortgage and personal finance content for accuracy, clarity, and real-world applicability. He specializes in ensuring information reflects how lending actually works in practice so consumers can make confident, informed decisions.
    Our Editorial Standards

    Key Takeaways

    • You can use a fixed-rate home equity loan for home renovations.
    • Those loans are useful for large, one-time home improvements like roof replacements.
    • They provide more payment certainty than HELOCs because they have a fixed rate.
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    A fixed-rate home equity loan can be a straightforward way to finance a home renovation when you know the project cost and want predictable monthly payments.

    With this type of loan, you borrow a lump sum secured by your home at a fixed interest rate. You then repay the loan through equal monthly payments over a set term.

    Homeowners frequently use home equity loans for large one-time upgrades such as kitchen remodels, roof replacements, window upgrades, or HVAC installations.

    Because the interest rate and payment stay the same throughout the loan term, many borrowers prefer this structure for projects with clearly defined costs.

    Understanding Fixed-Rate Home Equity Loans

    A fixed-rate home equity loan is a lump-sum loan secured by the equity in your home. Because the loan sits behind your primary mortgage, it is often called a second mortgage.

    Lenders determine the maximum loan amount based on combined loan-to-value (CLTV), which compares all mortgage balances against the home’s current value.

    Most lenders allow total borrowing up to roughly 80% to 85% of the home’s value, although limits vary based on credit, property type, and lender policies.

    You can use our home equity calculator and CLTV calculator to get an idea of what that could mean for you.

    CLTV Calculator

    Estimate how much you may be able to borrow based on your home value and existing debt, using a combined loan-to-value (CLTV) limit.

    %
    Common ranges: ~80%–90%
    Illustrative estimate only. Not financial advice.

    Your Results

    Estimated borrowing capacity
    —
    Current debt vs. CLTV limit
    ——
    How this calculator works

    This calculator estimates borrowing capacity based on Combined Loan-to-Value (CLTV) — the ratio of your total home-secured debt to your home's value:

    CLTV = (Mortgage balance + other liens) ÷ Home value

    Given your chosen maximum CLTV limit (commonly 80–90%), the calculator finds the maximum total debt allowed, then subtracts what you already owe:

    Borrowing capacity = (Home value × max CLTV) − existing debt
    Illustrative estimate only. Actual HELOC and home equity loan limits depend on lender guidelines, credit score, income, property type, and appraisal.


    Connect with an expert loan officer to see how much you qualify for

     

    How Fixed-Rate Home Equity Loans Differ from Other Options

    The main alternative to a home equity loan is a HELOC. A HELOC, or home equity line of credit, works like a revolving line of credit. You can draw funds over time as needed, and rates are typically variable.

    Another alternative is a cash-out refinance. That replaces your existing mortgage with a new, larger loan and provides cash at closing based on your equity and CLTV caps.

    Fixed-Rate Home Equity Loan vs HELOC

    Feature

    Fixed-Rate Home Equity Loan

    HELOC

    Access to funds

    Lump sum at closing

    Draw funds as needed

    Interest rate

    Fixed for the life of the loan

    Usually variable

    Monthly payments

    Equal principal and interest payments

    Often interest-only during draw

    Payment stability

    Highly predictable

    Can change with rate and balance

    Best use case

    Defined, one-time projects

    Multi-phase or uncertain costs

    When to Use a Home Equity Loan for Renovations

    Fixed-rate home equity loans are typically best for projects where the cost is clearly defined.

    Kitchen remodels, bathroom upgrades, a roof replacement, basement refinishing, or HVAC replacement are all strong use cases for a fixed-rate home equity loan.
    Projects that increase usable living space.

    Because funds are provided upfront, borrowers can pay contractors and purchase materials without needing to draw funds gradually.

    Risks and Considerations

    Borrowing against home equity carries certain risks.

    Your home serves as collateral, so missing payments can put your home at risk. And even with fixed rates, long loan terms increase total interest paid. Borrowing too much equity can also reduce your financial flexibility if housing prices decline.

    Maintaining emergency savings and borrowing conservatively can help reduce these risks.

    The Bottom Line

    A fixed-rate home equity loan can be used for home renovations, and is particularly good for one-off projects with a clear cost. Those loans provide more payment certainty than HELOCs, but less flexible access to fund since you get your cash as a lump sum.

    Frequently Asked Questions

    What is a fixed-rate home equity loan?

    A fixed-rate home equity loan allows you to borrow a lump sum against your home equity at a fixed interest rate and repay it through equal monthly payments over a set term.

    Is a home equity loan good for home improvements?

    Many homeowners use home equity loans for renovations because they provide predictable payments and access to larger sums of money upfront.

    How much can I borrow with a home equity loan?

    Loan limits are typically based on combined loan-to-value ratios, which often fall around 80% to 85% of the home’s value depending on the lender and borrower qualifications.

    Are home equity loan interest payments tax deductible?

    Interest may be deductible if the funds are used to buy, build, or substantially improve the home securing the loan.

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