Swimming pool finance guide

Everyone wants to go swimming.

Swimming pools are growing in popularity as more homeowners across the country install pools while buyers look for homes with pools. In 2020, the underground residential pools increased by more than 20 percent compared to the previous year.

According to the National Association of Realtors, a home with a pool is estimated to sell for an estimated $ 27,199 more than a comparable home without a pool today. However, since pools typically cost over $ 50,000 to install, they don’t exactly provide a high return on investment.

Pro tip

Always get quotes from a few different contractors before choosing a pool installation company.

If you are installing a pool in your yard, it doesn’t necessarily pay off when you finally decide to sell your home. But if you plan to do it, there are a few ways to pay for it before the hot summer season. With home mortgage rates currently low, now may be a good time to consider pool financing.

What is a pool loan and how does it work?

You may have seen banks and other lenders promoting something called “pool loans” – these are usually unsecured personal loans that can be used for almost anything.

Personal loans usually have higher interest rates than other financing options. So if you are interested in financing a pool for your own home, we recommend that you first find out about different types of financing.

Whichever financing option you choose, make sure you understand the full stake, including all fees and costs, associated with pool financing. Many financing options require you to use your home as collateral – which means if you cannot repay the loan, you can lose it. For a larger purchase like a swimming pool, loan calculators can help you estimate the cost.

After all, you don’t want to overwhelm your finances for this backyard improvement. “A pool addition should improve your life and lifestyle without compromising your ability to conveniently meet critical financial obligations such as mortgage costs, education savings, retirement benefits, auto payments and other ongoing expenses,” said Todd Nelson, senior vice president of Strategic Partnerships for the online lender LightStream.

The best ways to finance your new pool

Installing an in-ground pool is a big project and many homeowners may not have the cash to pay out of pocket. If you want to finance a swimming pool, there are several options.

Home loan

A home loan enables you to borrow against your home equity. This is also known as a second mortgage. How much you can borrow depends on how much your home is worth and what you still owe on your first mortgage. This type of loan can be a good option if you have high home equity, but it may not work if you recently bought your home.

“These loans often do not provide enough funding to meet the total cost of a pool for new homeowners,” said Justin Goldman, CEO and co-founder of RenoFi, a financial services platform that works with lenders to offer home renovation loans. “Pools often cost at least $ 50,000, depending on the market, material, and size, so the average homeowner with a $ 400,000 home who has paid off $ 80,000 so far can only get a $ 40,000 loan if the maximum creditworthiness of the bank is 90% of the current value. ”This means that the homeowner has to cover the remaining costs and repay the loan over time.


A home equity line of credit, or HELOC, provides a more flexible way to borrow against your home equity. Instead of getting a lump sum like you would with a home loan, a HELOC is a revolving line of credit. Similar to using a credit card, HELOC allows homeowners to borrow and use finance as needed.

Cash-out refinancing

A cash out refinance is a type of mortgage loan. You are refinancing your current mortgage with a new mortgage that is worth more than you owe on the home. You will receive the difference in cash back as a lump sum that you can use to finance a pool. If you’ve built up enough home equity, this can be an affordable financing option.

“If you are already planning a refinancing, a cash-out refinancing is a good option because you don’t have to take out a second equity loan, just refinance your first mortgage. The closing costs can be high, however, so make sure you refinance at a lower interest rate, ”Goldman said.

Private loan

These loans are usually unsecured so you don’t have to worry about putting your home as collateral. However, since personal loans typically do not require collateral, they also come with higher interest rates. You should at least find out about other home improvement financing options before opting for a personal loan.

What to consider when applying for a pool loan

When applying for pool financing, your personal creditworthiness is paramount. The higher your credit rating, the better interest rate offers you are likely to get. Many lenders offer the best terms for borrowers with credit scores in their mid-700s.

The length of the loan term depends on which method you choose for pool financing. But many lenders allow a term of a decade or more. When deciding on funding, consider all of the costs associated with the project.

“Knowing how much you can spend is important to any renovation,” said Nelson. “With a solid budget, you can prioritize the size of your project. Make informed decisions about how much you have available for construction workers, products and services; and determine how the project can be financed most economically. “

It is a good idea to overestimate expenses when budgeting. Usually there are costs that you may not see in the planning phase.

“Digging up your background to install a pool can impact groundwater management and plumbing,” Goldman said. “A lot of people don’t consider any permits or surveys that might be required of their community when preparing their budget.” They don’t want these hidden costs to surprise you.

Pool credit vs. direct purchase

Financing a swimming pool will add to the cost of the project in the long run. If you are planning on taking out a loan, the interest you pay over time is reduced by a sizeable down payment, which means the overall cost of the financing is lower.

Once the pool is installed, you should budget for repairs as well. “Don’t forget that the annual maintenance costs of pools add up. A loan can help pay for the initial install, but you will be spending thousands each year to keep it going, ”Goldman said. Annual swimming pool maintenance is expensive, so keep that in mind as you focus on your immediate summer plans.