Roof Financing: How To Find The Right Option For You

As your primary shield against rain, wind and storms, your roof is an integral part of your home’s structure, and keeping it in excellent condition should be one of your top priorities as a homeowner.

While replacing or even just repairing a roof can be a costly project, plenty of roof financing options can help you take care of your home without having to dig deep into your wallet to cover the full price all at once. Below, we’ll explore the most common types of financing and explain how to go about finding the best option for you.

According to HomeAdvisor, the typical cost of a roof replacement in 2023 has a wide range of $5,714 to $12,350, but you could end up paying a bit less or quite a bit more.

Why is the range so wide? Like most home improvement projects, there’s no standard price you can expect to pay for a new roof. The final cost of a new roof will depend on a number of variables, such as:

• Roofing materials (shingles, protective membranes, flashing)
• Size
• Structure and complexity
• Location
• Contractor rates
• Permit costs
• Disposal fees
• Additions desired

This can make it hard to estimate how much you need to finance your roof replacement, and most roofing contractors won’t be able to tell you what price to expect until after they see what they’re working with and can give you an official estimate. When you receive this estimate, you’ll likely get quoted a price per square, which is simply a 100-square-foot section of roof.

If you aren’t prepared to pay thousands of dollars out of pocket for a new roof, don’t worry. Many homeowners turn to financing options for roof repairs. Here are some frequently used options.

Insurance

Before jumping into debt on your roof replacement, make sure your insurance doesn’t cover it. In some cases, homeowners insurance might cover at least a portion of your repairs, but you’ll need to look through your coverage information or speak with a customer service representative to figure out whether you’ll be covered in your particular situation.

If your roof is suffering from natural wear and tear, insurance probably won’t help you. However, if you’re trying to repair storm damage, there’s a good chance you might get some assistance.

Credit Cards

As with many other purchases, you can charge roof repairs to your credit card. Just keep in mind this might come with some disadvantages in the long run. Credit cards typically have high interest rates compared to some other financing options, like personal loans. Also, credit cards don’t use fixed monthly payments, making them difficult to budget for.

And, for a large-cost item like a new roof, a credit card might not be the best option since it’ll likely have a lower borrowing limit than a personal loan and it can result in paying more in interest over time.

Home Equity

Home equity loans, home equity lines of credit (HELOCs) and cash-out refinances are good options if you have equity built up in your home and are willing to cash it out to pay for your roof repairs. Home equity loans are most useful if you need to take out a large sum of money and are looking for more flexibility with your repayment terms and interest rate.

It’s important to note, however, that home equity loans are secured, which means your home could be foreclosed on if you can’t make your payments.

FHA Loans

The Federal Housing Administration (FHA) offers a few options for home improvement financing in conjunction with the Department of Housing and Urban Development (HUD). These options include FHA 203(k) loans and FHA Title I loans, and they can work if you have a lower credit score and qualify to refinance your home with an FHA loan. You can learn more on the HUD website.

Company Financing

Roofing companies and contractors often offer their own financing options for roof replacements and repairs. Sometimes these options are available directly from the roofer, but often you’ll find that loans are offered through a third-party lender. Be sure to carefully read the documentation you’re provided and compare the rates and terms you’re offered with other financing options.

Personal Loans

A personal loan can be used for numerous purposes, including roof replacements and repairs. Personal loans are often an excellent home improvement loan option if you can’t pay out of pocket and don’t want to use home equity. That’s because most personal loans are unsecured – meaning your lender won’t require any collateral.

Personal loans also have fixed interest rates and consistent monthly payments, unlike a credit card. And, in many cases, the interest rate on a personal loan will be lower. All this makes paying back what you’ve borrowed easier.

It’s worth noting, too, that you can often get your personal loan lump sum in only a few business days. Just keep in mind that personal loan lenders typically have strict credit requirements, so you may need to check your credit score before applying for the loan.

Having several financing options available to choose from can help you find the perfect loan for your situation, but taking the time to research each one can feel overwhelming, nevertheless. To narrow down your list of options, consider evaluating the following factors:

• Loan amount: Before picking a type of financing, think about how much you’ll need to borrow. For instance, if your costs are minimal, a short-term personal loan might work. However, if you need tens of thousands of dollars, a home equity loan might be better.
• Loan term: Besides the loan amount, you should consider how long you want your repayment to last since each option comes with different terms. For example, a personal loan term can be 12 – 60 months while a HELOC can last as long as 20 years.
• Annual percentage rate (APR): Comparing APRs between loans is more effective than looking at interest rates. That’s because APR includes additional costs, such as application and origination fees.
• Monthly payment: Your monthly payment will be affected by your loan amount, term and APR. Make sure to double check that your payment amount works with your current budget.
• Time to fund: If your roof needs an emergency repair, you might need to get your loan in a short amount of time – and some options take longer than others. Personal loans can be funded in a few days, while a cash-out refinance can take 45 – 60 days to complete.
• Reviews and ratings: Lastly, you can verify your choice of lender by checking customer reviews or ratings from the Better Business Bureau^Ⓡ (BBB). You can also ask friends and family members for their recommendations.

If a loan sounds like the best route for you, here’s how you can get the process started.

1. Check Your Insurance Policy

As mentioned, your insurer might be able to help cover the costs of your roof repair in some situations. If your roof was damaged during an accident, for example, insurance would be more likely to cover your repair. If you aren’t covered at all or need to cover some of the cost out of pocket, you can turn to a roof loan to make up the difference.

2. Ask For Estimates

A roof is a major purchase, so make sure to shop around before settling with a contractor or roofing company. As you now know, roofing costs can vary wildly, so it’s important to consult a few companies to get a good idea of how much you can expect to pay and who can offer the best deal in terms of quality and price of labor. You’ll also want to see how the price of materials differs from one roofer to the next.

3. Pick A Type Of Roof Financing

At this point in the process, you’ll have an idea of how much your roof replacement will cost. Using the contractor’s estimate and your monthly budget, determine what type of financing you want to use. You can also use our personal loan calculator to find a monthly payment and repayment term that works for you.

4. Choose A Lender

If you’re going to use a loan to finance your roof replacement, you should vet your potential lenders the same way you did your potential contractors. Many lenders offer personal loans, HELOCs, home equity loans, FHA loans and cash-out refinances. Compare rates and terms and see who can best accommodate your credit score, debt-to-income ratio and other financial qualifiers.

5. Submit Your Application

With a lender chosen, you can now fill out a loan application. You’ll need to provide some additional documentation, like a form of identification, pay stubs, bank statements and tax returns. Then once you secure approval from your lender, you’ll receive your funds as a check, debit card or direct deposit.

Use the answers to these frequently asked questions to learn more about financing a roof repair or roof replacement.

Can I finance a roof with bad credit?

The minimum credit score for a roof loan depends on the type of financing you use. Personal loans, home equity loans and HELOCs usually have a minimum credit score requirement in the mid-to-high 600s, while FHA 203(k) loans require a 500 or higher. You can discuss eligibility requirements with your lender to determine the right loan for you.

Should I get a loan for a roof replacement?

Deciding whether a roof loan is for you will depend on your finances and the scope of your project. If you don’t have the cash to cover the costs, financing might be the right choice. By comparing options and assessing the pros and cons of each, you can find the loan that best fits your budget.

Do all roofing companies offer financing?

No, not all roofing contractors offer a form of financing. And those that do often partner with a third-party lender to offer a personal loan or credit card to cover the costs of your new roof.

Replacing your roof may feel daunting, but few projects are more important to the well-being of your house. By reviewing your options and taking action as soon as you notice a problem with your roof, you can save on repairs further down the road and ensure you and your family stay safe, sound and protected from the elements.

Ready to begin your roofing project? Get started now and apply for your loan online with Rocket Loans^SM.