How to Finance a Swimming Pool

Pool financing options include unsecured personal loans and equity financing that uses your home as collateral.
Last updated on May 2, 2022

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On a hot summer day, a dip in a cool pool feels priceless. But installing that swimming pool definitely comes with a price tag.

An above-ground pool costs $700 to $3,600, while an in-ground pool costs $36,750 to $66,500, according to home improvement website HomeAdvisor. Cash is the interest-free way to pay for your backyard oasis, but saving that kind of money could take years.

To finance the project, you have a handful of options. Some are unsecured and others use your home as collateral. The best financing option depends on the project’s cost as well as your home equity, credit and income.

Here are five ways to finance a swimming pool.

1. Personal loans

Personal loans are often unsecured, meaning you don’t pledge collateral like a house or car to borrow the money. Instead, lenders consider your creditworthiness when deciding whether to lend to you. You get a personal loan in a lump sum and repay it in monthly installments, usually over a term of two to seven years.

Personal loan amounts are $1,000 to $100,000, and annual percentage rates range from 6% to 36%, but your specific loan offer depends on information like your credit score, credit history, income and other debts. The lowest rates and largest loans usually go to borrowers with good or excellent credit (690 or higher FICO score), high incomes and low debt.

When personal loans are best: Consider a personal loan if you don’t have enough equity in your home to cover the cost of a pool. It may also be a good choice if you need the funds fast, because personal loans are often funded within a day or two of approval. And because loan amounts are fixed, they work when you have a firm cost estimate for your pool.

Pros and cons of financing a swimming pool with a personal loan:

Pros

Cons

  • No collateral required.

  • Funding is fast.

  • Fixed payments help you budget.

  • Rates are likely higher than home equity financing.

  • Can’t be used for pools that cost over $100,000.

  • Short repayment terms may require large monthly payments.

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2. Home equity loans

A home equity loan is a second mortgage that you borrow in a lump sum and repay in fixed monthly installments.

With a home equity loan, you can borrow up to 85% of your home’s value, minus what you owe on your mortgage. These loans have repayment terms up to 15 years, and average rates are usually 4% to 6%.

When home equity loans are best: Home equity loans work best if you have enough equity to pay for the new pool and prefer fixed payments. This option also requires a firm cost estimate, because you can borrow only once.

Pros and cons of financing a swimming pool with a home equity loan:

Pros

Cons

  • Fixed payments help you budget.

  • Low rates and long repayment terms keep monthly payments low.

  • Often lower credit and income requirements than a personal loan.

  • Interest is tax deductible.

  • Your home is collateral for the loan.

  • Underwriting and appraisal may delay pool installation.

3. Home equity lines of credit

A home equity line of credit, or HELOC, is an open credit line that you draw from as needed during the pool installation. You can make interest-only payments during the “draw period,” which is usually the first 10 years. After that, you repay the amount borrowed for up to 20 years.

You can usually borrow up to 85% of the home’s value, minus what you owe on the mortgage. Average APRs are 4% to 6%, but the rate varies during the loan’s lifetime.

When home equity lines of credit are best: A HELOC’s flexibility makes it a good choice if you’re concerned about surprise expenses or if the cost estimate could change.

Pros and cons of financing a swimming pool with a HELOC:

Pros

Cons

  • Borrow-as-you-need structure leaves room for surprise or add-on expenses.

  • Low rates and long repayment terms keep monthly payments low.

  • Often lower credit and income requirements than a personal loan.

  • Interest is tax deductible.

  • Variable rates mean interest costs may increase during the loan’s long lifetime.

  • Fluctuating payments may make budgeting difficult.

  • Underwriting and appraisal may delay pool installation.

  • Your home is collateral for the loan.

4. Cash-out refinancing

With a cash-out refinance, you get a new mortgage that’s larger than your current mortgage. You use the new loan to pay off the old one and cover the swimming pool with the extra cash.

Because you’re replacing the old mortgage, you’ll have a new rate and repayment term. Common mortgage repayment terms are 15 and 30 years, and rates are often from 4% to 6%.

When cash-out refinancing is best: Cash-out refinancing works best if you need a large loan for a major pool installation. Ideally, you also get a mortgage rate that's lower than the previous one.

Pros and cons of cash-out refinancing for a swimming pool:

Pros

Cons

  • A potentially lower mortgage rate.

  • Often lower credit and income requirements than a personal loan.

  • Interest on cashed-out amount is tax deductible.

  • Your home is collateral for the loan.

  • Underwriting and appraisal may delay pool installation.

5. Contractor financing

Some pool installation companies and contractors offer unsecured financing through a third-party lender. Amounts, rates and terms vary by company, but you could borrow up to $200,000. Repayment terms are up to 20 years and rates start from 3% to 5%, but maximum rates could be 25% or higher.

This type of financing is usually offered in person after you and the contractor have agreed on a budget, but it’s smart to take a day or two to compare other options.

When contractor financing is best: This choice is best if it’s your lowest-rate option with repayment terms that fit your budget. It also works well if you want to start right away, because approval can be fast.

Pros and cons of using contractor financing for a swimming pool:

Pros

Cons

  • Funding is fast.

  • No collateral.

  • High loan amounts can pay for expensive pools.

  • Long repayment terms keep monthly payments low.

  • Rates may be higher than home equity options.

  • Not all contractors offer financing.

  • Interest is not tax deductible.

Steps to finance a swimming pool

  1. Determine the pool’s cost. Get quotes from contractors and decide how much you’ll need to borrow. Because options like personal and home equity loans come in a lump sum, you need a firm estimate to apply for the correct amount.

  2. Compare financing options. Once you have a solid cost estimate, compare loan options up to that amount. For example, if the new pool will cost more than you can borrow in equity, then a personal loan may be a better option.

  3. Compare rates. After you’ve chosen the financing option with the right loan amount and repayment structure, compare lenders to find the lowest rate.

  4. Make a repayment plan. Calculate your monthly loan payments and see if they fit in your budget. Make a plan to pay on time each month over the entire loan term.

  5. Apply. Once you’ve chosen a lender, submit an application. This step will usually trigger a hard credit pull, which will cause your credit score to dip temporarily.

Other swimming pool costs to consider

Cleaning: If you’re not cleaning the pool yourself, you’ll want to budget for weekly cleaning during pool season. This service can cost $75 to $100 per hour, according to HomeAdvisor.

Maintenance: Your new pool may also require water level checks, pH level maintenance and winterization. HomeAdvisor estimates that having a professional maintain your pool can cost $80 to $150 per month.

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