Planning to finance a new garage? Enter your project cost below to see your monthly payment, total interest and payoff date, and compare home equity loans, HELOCs, personal loans and other options at October 2026 rates. Not sure what the garage will cost? Start with our garage cost calculator.
Garage Loan Calculator
1Your project
2How you’ll pay for it
3Rate, fees and extra payments
Total cost of your garage
| Total you’ll pay | $0 |
Compare ways to finance
| Option | APR | Term | Monthly | Cost |
|---|
Year-by-year payoff schedule
| Year | Principal | Interest | Balance |
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How Much Is the Monthly Payment on a Garage Loan?
Your payment depends on how much you borrow, the interest rate and the loan term. As of October 2026, home equity loans average about 8.8%, HELOCs about 7.4%, and personal loans about 12.5% for borrowers with good credit. At those rates, a $40,000 home equity loan over 15 years costs about $409 a month, while a 5-year personal loan for the same amount runs about $927 a month.
| Loan amount | Home equity, 10 yr | Home equity, 15 yr | Home equity, 20 yr | Personal loan, 5 yr | Personal loan, 7 yr |
|---|---|---|---|---|---|
| $10,000 | $126 | $100 | $89 | $225 | $179 |
| $25,000 | $314 | $251 | $222 | $562 | $448 |
| $50,000 | $628 | $501 | $443 | $1,125 | $896 |
| $75,000 | $942 | $752 | $665 | $1,687 | $1,344 |
| $100,000 | $1,256 | $1,002 | $887 | $2,250 | $1,792 |
A longer term lowers the monthly payment but raises the total interest. On a $40,000 home equity loan, stretching from 10 to 15 years cuts the payment by about $100 a month but adds nearly $12,000 in interest. Use the calculator above to try different terms, or add an extra monthly payment to see how much faster you could pay it off.
Ways to Finance a Garage in 2026
Most banks don’t offer a loan labeled “garage loan.” Instead, homeowners pay for a new garage with one of the options below. Here’s how they compare for a $40,000 project with good credit:
| Option | Typical APR | Typical term | Monthly payment | Interest and fees | Best for |
|---|---|---|---|---|---|
| Home equity loan | 8.8% fixed | 15 years | $409 | $33,617 | Lowest fixed payment |
| HELOC | 7.4% variable | 10 years | $477 | $17,294 | Paying as the build progresses |
| Personal loan | 12.5% fixed | 5 years | $927 | $15,615 | Fast funding, no home equity needed |
| Contractor financing | About 12% | 10 years | $574 | $28,866 | Convenience, promo offers |
| Credit card | 19.7% | 5 years | $1,053 | $23,185 | Small balances you can clear fast |
Home Equity Loans
A home equity loan gives you a lump sum at a fixed rate, repaid over 5 to 30 years. Because your house secures the loan, rates are much lower than for unsecured loans. Most lenders let you borrow up to 80% to 85% of your home’s value, minus what you owe on your mortgage. Expect closing costs of about 2% to 5%, though some lenders waive them. This is usually the cheapest monthly payment for a large garage project, but missing payments puts your home at risk.
Home Equity Lines of Credit (HELOCs)
A HELOC works like a credit card secured by your home. You draw what you need during a draw period, usually 10 years, and pay interest only on what you’ve used. That fits a garage build well, since you pay the builder in stages. The catch is the variable rate: your payment rises if rates go up. Many HELOCs also allow interest-only payments during the draw period, which keeps payments low at first but leaves the full balance to repay later.
Personal Loans
Personal loans don’t use your house as collateral, and funds often arrive within a few days. Rates range from about 6% for excellent credit to 36% for poor credit, with an average near 12.5%. Terms are short, usually 2 to 7 years, so monthly payments are high. Watch for origination fees of up to 8% or more, which are often taken out of the loan amount. Many lenders cap personal loans at $50,000, which may not cover a large detached garage.
Contractor and Builder Financing
Many garage builders, kit suppliers and prefab companies partner with lenders to offer financing at the point of sale. It’s convenient, and some offers include 0% promotional periods. Read the terms carefully: many “same as cash” promotions use deferred interest, so if any balance remains when the promo ends, you owe interest back to the first day. Compare the rate against a home equity loan or personal loan before you sign.
Cash-Out Refinance
A cash-out refinance replaces your mortgage with a bigger one and gives you the difference in cash. It only makes sense if the new mortgage rate is close to or below your current rate. With 30-year mortgage rates around 7% in late 2026, most homeowners with an older, lower-rate mortgage are better off leaving it alone and using a home equity loan or HELOC instead.
Credit Cards
With an average APR near 19.7%, credit cards are the most expensive way to pay for a garage. They can work for a small piece of the project, like a garage door or materials, if you have a 0% intro APR card and can pay it off before the offer ends.
How to Choose the Right Garage Financing
- You have plenty of home equity and want a predictable payment: a home equity loan.
- You’re paying a builder in stages or aren’t sure of the final cost: a HELOC.
- You have little equity, need money fast, or the project is under about $30,000: a personal loan.
- Your builder offers a true 0% promotion and you can pay it off in time: contractor financing.
Before you borrow, get a solid estimate of what the garage will cost. Our garage cost calculator prices a detached garage by size, materials and features, and you can add a garage door and a new driveway to your budget. Planning living space above the garage? See our guide to the cost to build a garage with an apartment or the ADU construction cost calculator.
Tips to Get a Lower Rate
- Check your credit first. Moving from fair to good credit can cut a personal loan rate by several points. Pay down card balances and fix report errors before you apply.
- Compare at least three lenders. Include your bank, a local credit union and an online lender. Many let you prequalify with a soft credit check.
- Compare APR, not just the rate. APR includes fees, so it’s the fairest way to compare offers.
- Put more cash down. Borrowing less lowers your payment and total interest more than any rate shopping.
- Choose the shortest term you can afford. Then add extra payments when you can; the calculator shows how much each extra dollar saves.
Frequently Asked Questions
Can you get a loan to build a garage?
Yes. Most people use a home equity loan, HELOC or personal loan. Some garage builders and prefab garage companies also offer their own financing.
What credit score do I need for a garage loan?
Home equity lenders generally want a score of at least 620 to 680, plus enough equity in your home. Many personal loan lenders accept scores around 580, but the lowest rates go to borrowers with scores of 740 or higher.
What is the monthly payment on a $50,000 garage loan?
At October 2026 average rates, about $501 a month on a 15-year home equity loan at 8.8%, or about $1,125 a month on a 5-year personal loan at 12.5%. Fees and your credit score will change the exact figure.
Is interest on a garage loan tax deductible?
Interest on a home equity loan or HELOC may be deductible if you itemize and use the money to buy, build or substantially improve the home that secures the loan, subject to IRS limits. Personal loan interest generally isn’t deductible. Check with a tax professional for your situation.
How much home equity can I borrow?
Most lenders allow a combined loan-to-value of 80% to 85%. For example, with a $400,000 home and a $250,000 mortgage, 85% of the value is $340,000, leaving up to about $90,000 you could borrow.
Does a new garage add value to my home?
A garage usually adds value, especially in areas where most homes have one, though you rarely recover the full cost at sale. A garage with finished space or an apartment can also add rental income where local zoning allows it.
Rates last updated October 2026 using Bankrate national averages for borrowers with a credit score around 700. This calculator gives estimates only and is not a loan offer or financial advice. Your rate and terms depend on your lender, credit, income and home equity.