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7 Ways to Finance a New Roof

7 Ways to Finance a New Roof
Lauren Ward
Lauren WardUpdated September 30, 2022
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
If your roof is in need of a replacement, getting the job done is a priority in order to avoid leaks and other damage to your home. Putting a new roof on your house can be expensive, however, and you may not have the cash on hand. Fortunately, there are a number of roof financing options available to help. Read on to learn more about new roof financing to help find the best option for your needs.

What Is the Average Cost of a New Roof?

The cost to replace a roof ranges from $5,500 to $11,000, and the national average is about $8,000. The size of your roof, the materials you use, and where you live can affect the price.  You’ll also need to factor in the cost of labor. Finding the right contractor for roofing is crucial. Get quotes from several contractors and check their references. You’re looking for a contractor who will do the best job at the best price. 

How Long Does It Take to Finance a New Roof?

The time it takes to secure new roof financing depends on the financing method you choose and the lender. For instance, one of the personal loan benefits is that after you’re approved for a loan, the funds are usually available within a few days—and sometimes even on the same day. The processing time for other loan options, such as an FHA Title 1 or FHA 203(k) loan, can be lengthy. Keep this in mind if you need to finance roof replacement quickly.

What Are Your Roof Financing Options?

How can you finance a new roof? Here are 7 of the most popular options for roof financing:  

1. Insurance  

Homeowner’s insurance helps cover damage to your home that’s caused by certain events, such as natural disasters or fires. However, the condition your roof was in before the damage occurred may factor into the amount that’s covered. If the roof was old and in need of replacement before the event, your insurance company may not cover it. It’s also important to understand the type of coverage you have. If you have an actual cash value policy, your insurance provider will only pay what the roof was worth before it was damaged. If you have a replacement cost value policy, your insurer will typically pay for replacing the roof. Check your policy for details and talk to your insurance agent.  If your insurance provider agrees to cover your roof’s replacement costs, you may be able to connect them directly to the roofing company to simplify the payment process.

2. HELOC

A home equity line of credit (HELOC) uses your home’s equity as collateral to secure a line of credit. Lenders typically require you to have 15 to 20% of the equity in your home, and they’ll usually allow you to use around 80% of that equity. HELOCs often have low interest rates. However, the rates tend to be variable, which means your payments may increase. And if you default on a HELOC, the lender can foreclose on your house.

3. Direct Financing 

Some roofing companies may offer roof loans. You’ll likely pay more in interest than you would with another type of loan, but if you don’t have good credit or much equity in your home, a roof loan may be an option you want to consider. Just be sure you can afford the monthly payments. And read the fine print in the contract before you sign.

4. Credit Cards 

A credit card with a high credit limit can be a good option for roofing financing, especially if you can pay off the balance quickly. Even better if it’s a reward card so you can earn points. If you have strong credit, another option is to look for a credit card with a 0% introductory APR. If you can pay off the roof before the introductory period ends, you won’t have to pay any interest. But if you can’t pay the balance in full, you’ll be charged  the card’s regular interest rate, which may be high.

5. FHA Title 1 Loans

If you don’t qualify for a home equity loan, you may be able to get an FHA Title 1 loan. These loans are geared to low-income homeowners and are intended to help with critical home improvements. The loans typically have fixed interest rates and come with a longer repayment term. However, the application process can be arduous and it can take a while to get the loan processed and the funds disbursed. 

6. FHA 203(K) Loans

If you’re purchasing a home that needs a new roof, then an FHA 203(k) loan may be a good fit. This type of loan combines a mortgage and a renovation loan into a single loan. The renovation needs to be at least $5,000, but you can use the money for other repairs in addition to your roof. Like the FHA Title 1 loan, however, the FHA 203(k) loan process can be fairly lengthy.  

7. Personal Loans

Personal loans can be used as home improvement loans to replace an old roof. You can also use them for other home projects. Personal loans tend to be flexible and you can use them for a variety of purposes.If you’d like to have personal loans explained, here’s how they work: After you apply for and qualify for a personal loan, you get a lump sum of money that you pay back over time with interest. Because these loans are unsecured, they don’t require collateral, and you don’t need an excellent credit score to get one. However, personal loans usually have higher interest rates than other forms of financing because they are unsecured.The qualifications for personal loans vary from lender to lender. Some have specific credit score and income requirements, but the good news is that there’s a lender for almost every type of credit profile. 

New Roof Financing Requirements

Requirements differ depending on the type of loan you’re applying for. In addition, each lender has specific financing requirements. Generally, the information that affects your approval for financing, as well as the interest rate you get, is:
  • Your income
  • Your debt-to-income ratio (your monthly gross income compared to your monthly debt)
  • Your credit score
  • The loan amount 
  • Whether or not there is collateral to secure the loan

Exploring Personal Loan Options

As you look into roof financing, be sure to weigh the different options to see what makes the most sense for your roof replacement needs and the cost of the project. For instance, if your roof needs to be replaced quickly to prevent more damage, a personal loan could be a good choice because you can get the funds fast. And when you’re shopping for a personal loan, Lantern by SoFi can help. Just fill out one simple application and you can compare personal loan rates, terms, and lenders all in one place. Our marketplace makes it quick and easy to look at multiple options to find the one that’s best for you.Find and compare personal loan options with Lantern today!
Photo credit: iStock/SLRadcliffe
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Frequently Asked Questions

What credit score do you need to finance a roof?
What are your options for roof financing?
Can you use a personal loan to finance a roof?

About the Author

Lauren Ward

Lauren Ward

Lauren Ward is a personal finance expert with nearly a decade of experience writing online content. Her work has appeared on websites such as MSN, Time, and Bankrate. Lauren writes on a variety of personal finance topics for SoFi, including credit and banking.
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