The real answer is that, no, money from a personal home bank loan, cannot be used for other than home improvement. This is subject to a research with an accountant and/the IRS rules. It is possible if the money is used for your business or credit card payoff or small business loan payoff, the cash could be taxed as personal income with the 1099C form. Legal uses will not be taxed until the end of 2012 when the law expires for the Home Exemption. This only occurs if the bank forecloses upon your personal home. You lose two ways, the loss of the home, your equity, and the IRS taxes you on personal income.