How to Finance a New Roof: Options, Rates, and What to Avoid

The six options, ranked by total cost

1. Home equity loan or HELOC

Secured by the equity in your home. Typically the lowest rates available - 6.5 - 9.5%, with terms of 5 - 20 years. The interest is potentially tax-deductible if the loan is used for home improvement (consult your tax person; the rules changed in 2018).

Trade-off: closing costs of $500 - $2,000 and a 2 - 6 week timeline. If your roof can wait that long, this is almost always the cheapest way to finance it.

2. Cash-out refinance

Refinance your existing mortgage for more than you owe and take the difference in cash. Rates track mortgage rates, currently 7.0 - 8.0%. Makes sense if you were going to refinance anyway and current rates are at or below your existing mortgage rate.

Bad idea if it raises your overall mortgage rate just to access $20k - you'd be paying 7%+ on your entire balance for decades to avoid a 9% HELOC.

3. Contractor financing

Most contractors partner with a lender (GreenSky, Hearth, Synchrony) that offers same-day approval. Rates vary widely - 0% promotional rates on 12 - 18 month plans, or 9 - 18% on longer terms after promo expires.

The 0% promo is genuinely useful if you can pay it off before it expires. Most plans are "deferred interest" - if you don't pay the full balance by month 18, you owe all the interest that would have accrued from day one. Set up an autopay for the full principal divided by the promo months. Don't miss.

4. Personal loan

Unsecured loan, fixed rate, fixed term (typically 3 - 7 years). Rates 9 - 24% depending on credit. Quick (24 - 72 hour funding), no home as collateral, no closing costs.

Better than credit cards, worse than home-equity. Reasonable middle-ground if you need funds fast and don't want to put your house on the line.

5. Credit card

Last resort for the full balance. Rates 20 - 30%. Only makes sense for short bridge financing (you have funds coming in 60 days) or to access a 0% intro APR card if you're confident you can pay it off in the intro period (typically 15 - 21 months).

Watch the same deferred-interest trap as contractor 0% - many credit card 0% offers are not deferred-interest (they just stop being 0% on the unpaid balance), but some are. Read the fine print.

6. FHA Title I / state energy programs

Government-backed home improvement loans through approved lenders. FHA Title I loans up to $25,000 unsecured for terms up to 20 years at competitive rates. Some states offer energy-efficiency rebates if you pair the roof with cool-roof or solar-ready upgrades.

Slow process and limited list of approved contractors, but worth checking - especially if you have moderate credit. Search "[your state] roof financing programs" for current offerings.

The "0% APR" trap

Contractor 0% financing (a pattern the CFPB has documented extensively) is usually structured as deferred interest: if any balance remains after the promotional period, all the interest that would have accrued from signing hits at once. We've seen $1,500 surprise charges on $18,000 roofs from people who paid off 95% of the balance but missed the deadline by a month.

The math to avoid this: roof total ÷ promo months = monthly autopay. Set it. Don't change it. If you can't afford that monthly number, this isn't the right financing for the project.

What lenders actually look at

• Credit score: 700+ gets the best rates everywhere.
• Debt-to-income: Total monthly debt < 43% of gross income for most lenders.
• Equity (for secured loans): Usually need 15 - 20% remaining after the loan.
• Loan-to-value: Most home-equity products cap at 80 - 85% combined LTV.

Run the math before you sign

Know what the project actually costs before you decide how to finance it. Run the calculator for your roof's range - then loan amounts and monthly payment scenarios become real decisions, not guesses.

Sources: CFPB · HUD FHA Title I