Home Addition Financing

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Home Addition Financing

How to Finance a Home Addition

Moving house is never easy, especially if you love the area you’re in and know that not much comes up in the area that would suit your family. Fortunately, moving home isn’t the only way to upsize your home and in strong market like that we have experienced since the pandemic, it may be the most affordable way to stay in your area and have the space you need. Of course, home additions aren’t cheap, and so you’ll need to think about home addition financing.

Applying for a home addition loan is fast and easy:

Fill out a simple and fast online application in just minutes

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Borrow up to $100,000 as fast as next business day

Absolutely no negative impact on your credit score, ever.

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Get pre-qualified in less than 2 minutes and compare offers from top lenders with no impact on your credit score.

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After your loan is approved with the lender of your choice, receive your funds as fast as 1-2 business days.

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Can you finance a home addition?

Yes - because it is such a large project and a costly undertaking, most people have to look to financing to pay for a home addition. There are a range of options available to you for how you can finance your home addition, which we’ll guide you through below.

Which lenders finance home additions?


Lightstream Personal Loans


Funding: Borrow $5,000 - $100,000
Minimum Credit Score: 660
APR: 2.49% - 19.99%
Loan term: 2 - 7 years
Funding turnaround: as soon as same business day

LightStream offers up to $100k personal loans as soon as same business day without origination fees and easy to use mobile app.




Funding: Borrow $1,000 - $50,000
Minimum Credit Score: 660
APR: 5.94% to 35.97%
Loan term: 2 - 7 years
Funding turnaround: as soon as next business day

Upgrade offers borrowers with fair credit scores to obtain loans up to $50k. Joint applications are allowed. Origination fees may apply.




Funding: Borrow $5,000 - $100,000
Minimum Credit Score: 680
APR: 4.99% to 19.53%
Loan term: 2 - 7 years
Funding turnaround: 1 - 3 business days

With SoFi personal loans, borrowers can get access to up to $100,000 with APR starting as low as 4.99% with extra bonus perks ($500 for each funded loan) and fast turnaround time. 24/7 customer support available.

How much does a home addition cost?

The varies hugely depending on where you live, what kind of addition you want, and the current cost of materials. According to HomeAdvisor, the average cost of a home addition is $46,343, though they can be anywhere from $20,000 - $75,000, depending on what you want.

Are there different types of home addition?

There are 3 types of home addition:

  • Full Addition: This is where extra rooms are added to the home, either on one floor or across multiple floors. This type of addition is the most extensive and thus most expensive.
  • Micro Addition: This is where you extend the size of a room with a bump-out, rather than adding an entirely new room.
  • Second Story Addition: If you have two floors but the first floor is larger than the second, you can extend the second story out so it matches the footprint of the ground floor.

What type of loan is best for a home addition?

  • Financing through your contractor: Large contractors that specialize in home additions may work with a partner lender to help arrange financing for the project. If your contractor does offer this, make sure you compare what they’re offering you with external lenders so you can make sure you’re getting the project for the lowest total cost you can.
  • Personal loan: If you are looking for a small extension or have a high enough income and good enough credit score to qualify for a large loan, a personal loan can be the best way to find the financing you need. These loans have the benefit of being unsecured, so you don’t need to leverage your home’s equity to get your finance, which will keep your home safe if you got into financial difficulty.
  • HELOC: A home equity line of credit is one of the best ways to leverage your home equity to pay for the addition. This is where a lender gives you access to a line of credit with a maximum credit limit (like you have with a credit card) and only pay interest on the money you borrow. This can be a good option if you aren’t paying for the addition upfront.
  • Home Equity Loan: This loan is another that leverages your home equity, but is essentially a second mortgage.
  • Cash-Out Refinance: If you’re considering a home equity loan, also consider cash-out refinancing, which is remortgaging to see if you can release the equity in that way. For example, if your first loan was for $325,000, you could increase your mortgage to $400,000 for a large home addition (give or take some depending on how long you’ve had the original mortgage) and use the $75,000 to pay for the addition.
  • Rural Housing Loan: If you have a relatively low income and live in a rural area, you may be able to qualify for a rural housing loan from (or guaranteed by) the government. To find out more about this option, click here.

How much can you borrow for a home addition?

This is (unfortunately!) the “how long is a piece of string?” question. It depends totally on your income, how much debt you have, where you live, what kind of home addition you want, and how much equity you can leverage in your home, if you plan to use that method to pay for the home addition. Personal loans generally offer up to $50,000 or $100,000, though you’ll need to be highly qualified to have a chance at getting these large amounts.

Need help finding the right loan?

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Is it cheaper to build a new home or add an addition?

The answer to this question will depend a lot on your location and the current cost of materials. At the time of writing (January 2022), contractors are in high demand and the cost of materials is also high, so you may find that building a new home in a timely manner just isn’t an option. You need to find land (which may not be possible if you want to stay in your current area), get planning permission, and book all the contractors to complete the build. It’s certainly not a simple option.

Building an addition can also be a costly process, but it is generally more straightforward.

If you’re happy to move away from your current neighborhood, building a new home may be the best way to get your dream home. If you’re not sure what is most cost effective, speak to some realtors and contractors in your area to get a realistic view of what to expect.

How can you finance an addition to your home without equity?

Without equity, you’re only option will be a personal loan through a lender that works with your contractor, or one you choose to work with through your own research.

What are the pros and cons of home addition loans?


  • Get the additional space you need or want without having to move
  • Will add value to your home
  • Many options have low interest rates


  • You may not see a return on your investment if the market changes
  • You usually have to use your home equity which puts your home at risk if you were to default

What credit score do you need for home addition financing?

Realistically, you’re going to struggle to find home addition financing with a score of less than 660, and you should aim to have it as high as you can before you apply for financing. If you have a good income, you’re much more likely to qualify for a higher loan amount with a reasonable interest rate.

What are the home addition loan requirements?

You’ll need:

  • A score of 620 or higher (at the minimum)
  • A good income (how much depends on how much debt you already have and how much you want to borrow)
  • You can prove good affordability with your financial documents

Home Addition Loan Calculator

Find out how much your home addition loan repayments may cost you with our calculator:

How much do you need to borrow?


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What is the best loan for home addition?

Some of the best lenders for home addition loans are:

  • SoFi
  • Avant
  • LightStream
  • Wells Fargo
  • Upstart
  • USAA

To find the best personal loan lenders for your home addition, compare the lenders on our website.

Compare and Apply

A home addition is a big undertaking, but it’s one that is always well-worth it. Taking a home you already love and expending it to better meet your needs can help you to stay in your home many years or even for good, when you would have had to move to find the space you need. When you’ve consulted a contractor and are ready to move forward with your home addition, compare rates here and find a lender that works for you. When you find the right loan for your circumstances, click apply. The process of building a home addition isn’t always a fast one, but it is always worth it!

Need help finding the right loan?

No worries, we've got you covered! Compare personalized loan options in just minutes without impact on your credit score.

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Apply online and find your best rate without affecting your credit score.