7 Roof Loans to Finance a New Roof

» MORE: Compare home improvement loans

What is a roof loan?

A roof loan is a personal loan used for repairing or replacing a roof. If approved, the loan is funded and you repay it with interest in fixed monthly installments.

Roof loan amounts are from $1,000 to $100,000, and annual percentage rates range from 7.5% to 36%. Repayment terms are typically two to seven years.

Most roof loans are unsecured, meaning there is no collateral. Instead, a lender reviews your credit and debts to decide whether to offer you a loan and at what APR.

Borrowers with good or excellent credit (a score of 690 or higher) typically qualify for the largest loans and the lowest rates. Some lenders offer home improvement loans for bad credit (a score below 629), but you can expect a higher interest rate.

Roof loan pros and cons

A roof loan is a good option if you don’t have enough equity to borrow against your home and don’t want to max out a credit card.

Consider these pros and cons of roof loans:

How to get a roof loan

1. Get a firm cost estimate: Get a few quotes for the roof’s cost so you know how much to borrow. A personal loan is funded once as a lump sum, so you can’t request more funds.

2. Check your budget: Review your income and expenses to determine how much you can repay each month. Use a home improvement loan calculator to see what loan amount, APR and repayment term you’ll need to fit the payments into your budget.

3. Pre-qualify and compare: Many lenders let borrowers pre-qualify to preview loan rates and terms. Pre-qualifying doesn’t impact your credit score, so you can compare offers from multiple lenders to find the lowest APR, which is the least expensive loan.

4. Apply: Once you choose a lender, it’s time to apply for a personal loan. Tip to move things along: Gather documents like W-2s, pay stubs, bank statements and a government-issued ID before starting the application. Expect to hear from the lender within a day or two.

» MORE: How long does it take to get a personal loan?

Other ways to finance roof repairs and replacements

A home equity loan is a second mortgage that works similarly to a personal loan: You get the funds in a lump sum and repay them in fixed monthly installments. Good credit isn’t required to qualify, but you must build up equity before you can borrow against it.

Your home is collateral on a home equity loan, so you can lose it if you don’t make payments. These loans usually have lower rates and longer repayment terms than personal loans, meaning the monthly payments are lower.

» MORE: Compare home equity loans

A HELOC is a credit line you can draw on as needed, typically for 10 years. This type of financing can have low rates and repayment terms of 20 years, so monthly payments are low. You can get a HELOC with fair credit, but your home’s value must be at least 15% more than you owe.

HELOCs make sense for projects that last long or involve surprise expenses. Your home is collateral for this type of financing, and the lender may require an appraisal as part of the underwriting process, which could add a couple of weeks to the funding timeline.

» MORE: Compare HELOCs

Because of their high APRs, credit cards are best for low-cost repairs you can pay off quickly. If you can pay for the roof in 15 to 21 months, consider a 0% interest credit card with a promotional period during which you pay no interest. You will likely need good or excellent credit to qualify.

» MORE: Best credit cards for home improvement

Home improvement loans insured by the Federal Housing Administration require lower minimum credit scores than conventional mortgages. FHA-backed options are:

FHA 203(k) standard loans can cover repairs that cost at least $5,000 and up to $75,000. The process involves refinancing your existing mortgage with an FHA 203(k) loan and rolling the roof replacement costs into the new mortgage.

FHA Title 1 loans are fixed-rate loans designed for home improvements. Loans up to $7,500 are unsecured, while a mortgage or deed of trust on the property secures loans for $7,500 or more.

Your roofer may offer in-house financing or loans through a third-party financial company. Rates and terms depend on the roofing company and your credit score.

Carefully read the loan offer’s terms and conditions and compare it to other options to get the best deal.

Roof financing tips

Check your homeowners insurance: A roof damaged in a storm may be covered under your policy. However, you may have to pay a deductible before coverage kicks in.

Home warranty coverage: If you’ve purchased a home warranty, or your home is new and covered under a home warranty, it may cover roof repairs due to leaks.

Shop around: Compare estimates from multiple roofers to get a competitive price on materials and labor. Estimates should include all expected costs and a warranty covering any defects in roofing materials or labor.