Interest rates for home improvement loans vary a lot. While it depends on the size of the loan, a cash-out refinance often has higher rates. However, with an FHA 203(k) loan, your interest rate is likely to be close to today's low mortgage rates. Average interest rates for other types of home improvement loans, like home equity loans and HELOCs, are higher than mortgage rates. And with a HELOC your rate is variable, so it can rise and fall throughout the loan term.