Can someone explain what a 3% loan is?Would I be paying 3% of the loan back or would it be 3% interest...?

...on the entire loan.I'm getting some home improvement work done that may be about $12,000 and I may have a 0% deferred loan or I may be eligible for a 3% loan so I was trying to figure out what could be the highest out of pocket for me if I got the 3% loan. Info would be appreciated.