- Adding a pool can be one of the most expensive home renovation projects.
- Funding options include pool loans, home equity, and loans through the contractor or manufacturer.
- A new pool will likely add anywhere from 5% to 8% to your home's overall value.
Why invest in a pool?
A backyard pool can greatly enhance the enjoyment you get from your home and boost its value at the same time. However, adding a pool is also one of the more expensive home improvement projects you can take on.
Luckily, there are several pool financing options available that can help you cover the cost.
How to finance a pool
Understanding pool financing
Pools come in all shapes and sizes. According to HomeAdvisor, the average price tag is $33,600 and can go as high as $66,500 or more, depending on a number of variables.
The ways one can finance a pool are equally varied. We will focus on the five most common options available to homeowners:
- Personal loans for pool financing
- Home equity loan for pool financing
- Home equity line of credit
- Contractor financing
- Manufacturer or dealer financing
Types of pool financing
Home equity loans and HELOCs
A home equity loan is an option for financing your pool. This can be best for those who have significant equity built up in their homes. With a home equity loan, you borrow a lump sum based on the value of your home, minus the amount owed on the mortgage. Your home serves as collateral for the loan. The repayment terms on a home equity loan often range from 10 to 30 years, and the interest rate is generally variable.
Home equity loans are attractive for those who have a good amount of equity built up in their homes as they often offer lower interest rates than personal loans and can frequently allow you to borrow far more than with other forms of financing. However, it is important to remember that defaulting on a home equity loan could result in foreclosure, so it carries considerable risk.
Like a home equity loan, a home equity line of credit (HELOC) leverages the equity built up in your home. Tapping into your home's equity with a HELOC is similar to using a credit card, though a HELOC only covers a fixed period of time, known as the draw period. HELOCs usually have variable interest rates, and the repayment terms can be longer than that of home equity loans.
Note that the draw period may last longer than the pool installation, and you could face additional fees for closing the line of credit early. It's also important to note that interest rates on a HELOC are variable, and thus monthly payments can fluctuate over time.
Next step: See our picks for the best HELOC lenders »
Unsecured personal loans
A pool loan is a popular option for financing a pool. It is a personal loan that a lender markets specifically as a means to pay for the purchase and installation of a swimming pool.
Since they are personal loans, you can obtain a pool loan from a bank, credit union, or online lender. Whichever lender you choose, you will receive a lump sum that you can put toward the pool and pay off in fixed monthly installments, with interest, over a specified term.
"Pool loans typically have a term of five to 15 years, with the interest rate generally contingent on the borrower's credit score," says David Krebs, a mortgage broker in Florida. "A score of 650 or higher is usually desired for better interest rates."
You obtain a swimming pool loan the same way you get a personal loan for any other purpose. Many lenders will allow you to prequalify for a loan with no impact on your credit score, allowing you to see the rates and terms they are likely to offer before you submit a full application.
Pool financing through pool companies
Some pool manufacturers or dealers offer financing directly to customers. They may have partnerships with lending institutions or offer in-house financing options. Similar to contractor financing, a loan arranged via a manufacturer or dealer can provide a streamlined process since the financing is integrated with the pool purchase.
However, the same caveats apply. It is important to carefully review the terms, interest rates, and fees associated with the financing offer. Comparing offers from different manufacturers or dealers and exploring other financing alternatives can help you find the best deal.
Contractor financing for your pool
Many pool contractors offer their own financing options to help homeowners pay for their pool installations. These programs are typically arranged through partnerships with lending institutions. Contractor financing can be a convenient option since the contractor manages the application process and the loan terms, but homeowners should be cautious as there is the potential for conflicts of interest.
How to get a loan for a pool
Can you finance a pool?
To qualify for a pool loan, you typically need a credit score of 650-680. If you have a higher score, you can often get more favorable terms, like lower interest rates. Be sure to carefully review the terms and conditions, including interest rates and fees, to check that you are getting a favorable deal.
Steps to get a personal loan for pool financing
- Check your credit score. Most pool loans require you to have good to excellent credit, which means knowing where you stand before you apply for a new loan is important. If your credit score isn't up to par, you should consider taking steps to improve your credit score prior to financing a pool.
- Get an estimate. You can work with a contractor to determine an estimated cost for a pool. This will give you an idea of how much money you'll need to borrow so that you don't waste time looking at lenders who don't offer the full amount of pool financing that you need.
- Check if you prequalify. Prequalification is a simple step to see what rates you'll be eligible for. Most lenders offer this feature for free, and it usually takes only a few minutes to complete.
- Compare pool financing lenders. After checking what rates you prequalify for, compare each pool loan offer. While good rates and terms are important, it's also helpful to know what additional benefits a lender offers. For instance, lenders, such as SoFi, don't have any required fees, reducing the overall cost of your loan.
- Submit your pool loan application. Almost all lenders will let you submit an application online. It's typical for a lender to also ask you to provide financial documents, such as bank statements, W-2s, pay stubs, and a valid ID. The turnaround for approval depends on the lender you choose. Some lenders approve loans on the same day, whereas others may take several business days to approve a loan.
Best pool loans
The best pool loan for you depends on your credit score and financial situation, which will decide the lowest rates you qualify for. Here are our top picks:
LightStream personal loans
LightStream offers swimming pool loans at competitive rates, starting at 6.49% to 25.29% (with AutoPay discount, rates vary by loan purpose). Loan amounts from LightStream range from $5,000 to $100,000 and don't have any fees. Plus, if you complete the application and verification process by 2:30 p.m. ET on a business day, you can receive funding on the same day.
Read our LightStream Personal Loan review
SoFi personal loans
Home improvement loans from SoFi can be used to finance a new pool. SoFi is a solid option if you have good to excellent credit and are looking for flexible repayment terms. Loans from SoFi range from $5,000 to $100,000, with term lengths from two to seven years. Additionally, SoFi personal loans don't require any fees.
Read our SoFi Personal Loan review
Best Egg personal loans
Best Egg has home improvement loans available from $2,000 to $50,000. So, this lender may be more appealing if you only need a small amount. Best Egg offers fast funding personal loans, with about half of its customers receiving their money the next day. Best Egg also has a 95% customer satisfaction rating, according to its website.
Read our Best Egg Personal Loan review
FAQs about how to finance a pool
Financing options are more limited with bad credit, but some lenders offer unsecured personal loans with higher interest rates for these types of applicants. Additionally, pool companies may have financing plans that accommodate a broad range of credit profiles.
Home equity loans typically offer lower interest rates because they're secured against your home. Unsecured personal loans, on the other hand, don't require collateral and may be the preferable choice.
Financing terms vary by lender, but home equity loans and HELOCs can have terms of up to 20 years. Unsecured personal loans usually have shorter terms, ranging from two to seven years.
Specific government pool loans are rare, but you might find options for energy-efficient or "green" pools that qualify for special financing. You could also find rebates under local government energy-saving programs.
Before financing a pool, consider the total cost, including maintenance and insurance, how the pool will affect property value, and whether enjoyment and use of the pool justify the investment.
Most lenders required a credit score in the mid-to-high 600s to finance a pool. The better your credit score, the more likely you are to qualify for the lowest rates and best terms.
