Zero-interest home improvement loans 101: Everything you need to know

Imagine transforming your home — upgrading your kitchen or adding that dreamy backyard oasis — without worrying about high-interest rates. Getting a much-needed or much-anticipated home improvement done can be a very satisfying part of homeownership. Still, the costs are often very high — and back of mind when deciding to leap into home upgrades or repairs. Naturally, borrowing money for upgrades and repairs with home project loans is possible, but that, too, is often expensive.

A low-interest home renovation loan can be a great solution if you qualify. In some cases, you may even be eligible for zero-interest home improvement loans. We’ll help you understand how to find these tricky home repair financing options and how they work so you can move on with your project.

What are zero-interest home improvement loans?

Zero-interest home improvement loans, sometimes called Home Improvement Program (HIP) loans, are typically offered by local governments, nonprofit organizations, or community development programs to help homeowners make essential repairs or upgrades without the burden of paying interest.

These types of programs are generally reserved for:

• Seniors
• Low-income folks
• People with poor credit
• Residents of certain areas
• Homes under a certain value
• Homeowners with equity in their home
• Homeowners who are current on property taxes

There is no national database of low-cost or interest-free home improvement loans, so you’ll need to do some work in finding these options, if available, in your local area. These organizations will tell you whether you’re eligible, how to apply, and any program requirements.

If you’re having trouble locating resources, try calling 211 or visiting 211.org to find who in your area may offer zero interest loans. Otherwise, here is a good start for where to find home repair assistance:

• Your state housing finance agency
• Local non-profits like Habitat for Humanity
• Your local city and county government

How do zero-interest home improvement loans work?

You borrow a set amount to cover qualified home improvement projects, and instead of paying interest over the life of the loan, you repay only the amount you borrowed. Repayment terms vary—sometimes monthly, sometimes deferred until you sell your home or refinance.

The goal is to make necessary repairs like fixing a leaky roof, upgrading outdated electrical systems, or improving energy efficiency, affordable and achievable for homeowners who might otherwise struggle to pay out of pocket.

There may be restrictions, such as:

• Work may need to be inspected by a department official
• Work may need to be completed within a certain timeframe
• Funds may only be used for necessary repairs to bring a home back up to code
• You may need to repay any grant funds if you sell the home within a certain time frame
• Improvements for non-necessary things like hot tubs and garden landscaping may not be allowed

Alternative options to consider

The truth is that while they can be excellent resources, zero-interest home loans aren’t available for most people. If you’ve ruled these out as an option for you, here are some other home improvement funding options:

• Home improvement loan: Personal loans for home improvement are one of the most common ways to finance a renovation. These loans are usually unsecured and feature steady fixed-rate payments over a 1 to 7-year term. You typically need good credit and a stable income to qualify.
• Home equity loan: These loans offer more competitive rates than personal loans and credit cards and a 5 to 30-year repayment term. To qualify for a home equity loan, a homeowner needs to own at least 20% of their home’s equity, have good credit, and sufficient income. ‍
• Home equity investment (HEI): A home equity investment provides a lump sum of cash in exchange for a percentage of the home's future appreciation (change in value, not total home value). There are no monthly payments over a flexible 30-year term; instead, you repay the investment anytime you're ready to sell, refinance, or use another source of funds. HEIs require sufficient equity and a credit score above 500; there are no income requirements.‍‍
• 0% APR credit card: If you can pay off your project within a few months to a year, opening a new credit card with a 0% intro APR offer is also essentially a free loan. ‍
• Home equity line of credit (HELOC): A type of loan that acts like a revolving line of credit backed by the equity in your home. Homeowners can access funds as needed, up to a predetermined limit, for a 5 to 10-year draw period. Homeowners generally need great credit, 20% equity, and sufficient income to qualify.
• Government grants: Depending on your situation, you may qualify for government grants. These can also help cover home improvements—offering funds you don’t have to repay, unlike zero-interest loans.

Frequently asked questions

Do 0% interest loans exist?

They do—but they’re usually limited to specific programs and eligibility requirements, like income limits or certain types of repairs that help improve safety, accessibility, or energy efficiency. To find a home improvement loan program in your area, visit 211.org.

How much would a $50,000 home improvement loan cost per month?

It depends on the loan term and interest rate. For example, at 7% interest over 10 years, you might pay around $580 per month. With a zero-interest loan, it could be about $417 per month if you repay evenly over 10 years.

Can my home equity pay for home improvements?

Many homeowners tap into their home equity to cover repairs or renovations, often through options like a HELOC, a home equity loan, or a Home Equity Investment (HEI). Using your equity can come with some great benefits, like better interest rates than unsecured loans, longer repayment terms, and potentially lower monthly payments—which can make large projects more affordable. However, it’s important to remember that these options typically use your home as collateral. That means if you’re unable to keep up with payments, there’s a risk to your home.

Final thoughts

Homeowners have a wide range of financing options to make their home improvement dreams come true. There's a solution for everyone, from traditional options like personal loans and credit cards to specialized alternatives like zero-interest home improvement loans. Remember, choosing a financing option that aligns with your financial goals and capabilities is important.

If credit score, income, work history, or monthly payments are a concern, consider a homeowner-friendly option like Point's Home Equity Investment (HEI). Partnering with Point can be an excellent non-loan option to get the funding you need for your home improvement project. Learn more today.