Building a deck or patio at your home can be a great way to both increase the value of your property and get more from your outdoor space at the same time. But what are your options to finance building a deck or patio, and which of these is the right one for you?

In this guide, we will be taking a look at six of the most commonly used patio and deck financing options, so that you can make the right choice on how to get the best results from your project.

We’ll help you understand why many homeowners find that a home equity loan limits their borrowing power, why a personal loan could mean that your monthly payments end up being considerably higher than they need to be and introduce you to RenoFi Loans, a new type of home renovation loan that lets you borrow against your home’s future value that we think you’ll want to know about.

Specifically, we’ll take a look at:

How Much Does It Cost To Build A Deck?

The cost of building a deck is largely dependent on the size of the area and the materials used. We recommend getting estimates from contractors in your area before determining your budget for a deck project. However, this is a good place to start.

Remodeling Magazine suggests that the average cost to build a wooden deck is $14,360 and a composite deck is $19,856.  

Bear in mind that if you want to undertake a second story install, or if you want to build your deck to a unique or esoteric design, this will increase the cost. In general, you can expect this type of project to add between $8 and $20 per square foot.

The following can help to give you a rough idea of what you can expect to pay for different sizes:

  • A deck of up to 200 square feet in area – Between $4,000 and $14,000. $7,000 on average.
  • A deck of between 200 and 500 square feet in area – Between $7,000 and $35,000. $15,000 on average.
  • A deck of more than 500 square feet in area – Between $15,000 and $45,000. $24,000 on average

The Cost Of Building a Plastic or Composite Deck

Composite decking materials tend to be substantially more expensive than their wooden counterparts because of the more specialized manufacturing and processing techniques that are required before the material is ready for installation.

In general, you can expect plastic or composite decking to cost between $12 and $22 per square foot. If you include other components, such as moorings, railings, hardware, and framework, the cost increases to between $30 and $40 per square foot (not including installation). This makes composite materials around 40% more expensive than wood on average.

For an average size plastic or composite deck (320 square foot), expect to pay between $9,600 and $12,800 plus labor.

In some instances, however, composite materials can turn out to be cheaper than wood. Some wooden materials, such as Ipe and Tigerwood, can be very difficult to work with, which will generally increase the labor costs associated with their installation. In these cases, a composite option may be cheaper when costs are factored across the whole project.

The Cost Of Building a Pressure-Treated Wood Deck

During pressure-treating, wood is processed in a depressurized tank. The air within the wood is removed and a preservative is added in order to avoid insect infestation and weather-related rotting and decomposition. While pressure-treating is highly effective in both of these aspects, the wood will still be prone to weathering and corrosion, so further coatings and treatment will be required.

In general, you can expect to pay between $15 and $20 per square foot of decking material. For an average sized decking structure of 320 square feet, the cost will typically be between $4,800 and $6,500 plus labor.

The Cost Of Building an Elevated Concrete Deck

The cost of an elevated concrete deck is determined by a number of primary factors, chiefly, the conditions of the site, the area of the decking slab, and the materials and techniques you use for finishing. On average, this type of deck will cost you between $30 and $75 per square foot, meaning that an average sized build will set you back between $9,600 and $24,000. 

There are several different options you can choose for finishing. In most cases, a simple covering of protective paint will be the cheapest finishing option but other types of finish include stamped concrete and tiling.

Remember that you will also need a licensed engineer to design the structure for your elevated concrete deck and this can cost you between $300 and $700 for a reputable, licensed practitioner.

The Cost Of Different Decking Boards

How much your decking boards will cost you is dependent on the grade of the board you want to use for your project. Here’s a look at the average costs of different options:

Redwood

Redwood comes in a variety of different grades and boards in the lowest grade will cost around $5 per square foot, while higher-grade boards will cost around $30 for the same area. This means a 320-square-foot deck will cost anywhere from around $6,400 to $12,800.

Mahogany

Mahogany boards typically cost between $8 and $11 per square foot. However, it is important to bear in mind that mahogany is not used for decking frameworks or posts, and you will have to use other materials for these structural elements. This makes the total material cost highly variable.

Ipe

Ipe is a tropical hardwood that can be difficult to source, which pushes costs up. Expect to pay between $10 and $20 per square foot for materials. It’s also very, very strong — which is a good thing, but this can also make labor more expensive.

Tigerwood

Tigerwood is another tropical hardwood, usually sourced from Brazil or Africa. It tends to be a little cheaper than Ipe but is similarly strong and tough, which means labor costs will also be more expensive than they would be for other types of material. The cheapest Tigerwood boards are available at around $7 per square foot, although you can expect to pay up to $15 per square foot for some Tigerwood decking boards.

Bamboo

Bamboo is a fast-growing grass that provides a tough building material once it is mature. If you source your bamboo boards from a reputable provider, this is a renewable option for your decking. The materials themselves are relatively inexpensive, but installation can be tricky, which may increase the cost of labor. Expect to pay between $3 and $10 per square foot.

Cedar

Cedar is a softwood that is grown in the United States, making it relatively inexpensive to source. You can expect to pay between $3 and $7 per square foot for your cedar decking boards, which makes the material only marginally more expensive than pressure-treated wood.

Aluminum

Aluminum is a lightweight and robust decking material. This material will cost between $15 and $20 per square foot, significantly more than many wood options.

Fiberglass and composites

Vinyl, fiberglass, and PVC decking can vary significantly in cost, ranging from around $12 to $22 per square foot. 

How Much Does It Cost To Build A Patio?

The cost of building a patio can vary hugely, with an average sized build starting from around $1,850 and topping out at around $5,140. A typically sized concrete patio, on average, will set you back around $3,450. 

However, a number of different factors contribute to the cost, with size being the main one. As a bare minimum, you can expect a very small patio install to cost around $800, with larger-scale installation running well beyond $10,000. It’s important to properly scope out the project and size to be able to determine the budget you’re going to need. 

And this is before you even start considering more luxurious materials. Once you start to look at other options on the high end, the estimated costs will be even higher. In fact, Lucy Middaugh, an exterior designer based in California, confirmed to us that “any kind of stone decking or tiled patios will average within the $30,000 to $50,000 range.”

The two basic components of patio installation costs are labor and materials. Labor is likely to cost between $5 and $15 per square foot, while materials can range anywhere from $5 to $35 per square foot, depending on the kind of patio you are looking for.

Does a Deck Add Value To Your Home?

One of the questions that is often asked by owners who are considering building a deck is whether this project will add value to their home.

According to Remodeling Magazine’s 2020 Cost vs Value Report, you can expect to return 72.1% of the cost of a wooden deck and 66.8% of the cost of a composite deck.

But while it’s important to consider the value that a deck will add to your home (and remember this when looking at financing options that let you borrow based on the future value), for most homeowners, it’s about more than this.

A deck creates the perfect space for friends and family to gather together and enjoy each other’s company, socialize and eat together. 

The Pros & Cons of 6 Deck & Patio Financing Options

You’re probably considering a number of different deck financing options, and we’re the first to admit that things can quickly get confusing. 

So to help provide some clarity around the different financing options available to you to pay for a new deck or patio, below we’ll dive deep into six different types of loans and the pros and cons of each to help make your decision a little easier and clearer and help you to understand which one is right for you. 

A RenoFi Loan

RenoFi Loans are a new type of home renovation loan that lets you borrow against your home’s after renovation value rather than its current value, as a result significantly increasing your borrowing power when compared with other financing options and could be a great way to pay for your deck.

You see, while homeowners who bought their properties many years ago will likely have built up sufficient tappable equity to use to pay for home improvements, this is not the case for those who have bought recently. And not having equity means that a home equity loan or line of credit isn’t an option. 

And when we consider that most deck and patio projects are part of larger renovation wishlists and more extensive backyard improvement projects, it’s easy to see why choosing the right financing option becomes so important. 

Just take a look at the below and you can quickly see that building equity takes time:

A RenoFi Loan can increase your borrowing power by an average of 11x when compared with a traditional home equity loan, meaning that you won’t need to reduce the scope of your project and can focus your efforts on planning the perfect outdoor space.

These loans combine the best bits of a construction loan with a home equity loan, and let you borrow the most money with the lowest monthly payments.. all without the need to refinance.

In fact, RenoFi Loans are the only home renovation loan that doesn’t require you to refinance, making them the perfect financing option for those who have already locked in a great rate and don’t want to lose it.

RenoFi Loans are available both as a RenoFi Home Equity Loan and RenoFi Home Equity Line of Credit, meaning that you’re able to choose the option that works best for your project and renovation wishlist.

If you have been considering a home equity loan or cash-out refinance but don’t have the equity that is needed to pay for your deck or larger backyard renovation project, a RenoFi Loan could be perfect for you, increasing your borrowing power by letting you borrow based on your home’s value after the project has been completed. 

Here’s what you need to know about RenoFi Home Equity Loans:

  • Loan amounts from $20k to $500k
  • Low fixed interest rates like traditional home equity loans
  • Repayment terms up to 20 years
  • Ability to borrow up to 90% of the after renovation value
  • The full loan amount available at closing

And here’s what you need to know about the RenoFi Home Equity Line of Credit:

  • Loan amounts from $20k to $500k
  • Variable rates 
  • 10 year interest-only period, followed by 20 year amortization
  • Ability to borrow up to 95% of the after renovation value
  • Line of credit that can be drawn down & paid back at your leisure for 10 years

Take a look at how a RenoFi Loan compares with other deck financing options:

Renovation Home Equity LoanSingle-Close Construction To Permanent Loan (CTP)Fannie Mae HomeStyle LoanFHA 203k (Full)Two-Close Construction To Permanent Loan (CTP)
Is this a mortgage?YesYesYesYesYes
1st or 2nd mortgage?2nd1st1st1st1st
Require refinance of existing mortgage?NoYesYesYesYes
Typical Interest RateMarketAbove MarketAbove MarketAbove MarketAbove Market
Loan Limit (Renovation Cost + Mortgage)$500,000Jumbos allowedConforming onlyConforming onlyJumbos allowed
Loan Term (max)20 years30 years30 years30 years30 years
Credit Score Required660+700+620+580+580+
Loan to ValueUp to 95%Up to 95%Up to 95%Up to 96.5%Up to 80%
Can be used for building new home?NoYesNoNoYes
Restrictions on type of improvements?NoNoNoYesNo

Why not arrange a chat with one of our advisors today to discover whether a RenoFi Loan could be the right way to finance your deck and make your dream backyard a reality. Alternatively, use the {{ }} to see how much you could borrow and what your monthly payments would be.  

How do I know if a RenoFi Loan is right for my project?

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A Home Equity Loan or Line of Credit (HELOC)

Homeowners who have lived in their home for many years might find that a home equity loan or line of credit (HELOC) is an option for financing a deck and these remain a popular option for those in this position, but as mentioned above, those who have only recent purchased their properties will find that they haven’t built up enough equity for these to be suitable.

But even for those homeowners who are able to tap into their home’s equity, they might still find these options limit their borrowing power, given that they’ll typically only allow you to borrow up to 90% of your home’s current value. 

A RenoFi Loan, for example, can let you borrow up to 90% of your home’s value after a renovation has been completed.

A Cash-Out Refinance

Most homeowners shouldn’t use a cash-out refinance to pay for any renovation project, and that includes building a deck. 

This is for the simple reason that most find that they are required to refinance at a significantly higher rate than their existing mortgage, increasing monthly payments as a result and also that this financing option limits your borrowing power to 80% of your home’s current value. For many, this will mean that they are unable to borrow all of the money that they need and are unnecessarily forced to reduce the scope of their project.

A cash-out refinance also comes with expensive closing costs of between 2% and 5% based on the entire mortgage amount which, for a $200k loan, could end up being $5,000 to $12,500.

Unless you’re going to significantly reduce your interest rate, better financing options than a cash-out refinance exist that can help you to pay for your new deck. 

A Construction Loan

While construction loans are still frequently recommended as a way to finance home improvement projects, including building a deck, these aren’t going to be your best option. These loans are often considered to be an option because, like RenoFi Loans, they let you borrow based on your home’s after renovation value.

But we strongly believe that you shouldn’t use a construction loan for your renovation project and encourage you to take the time to understand the alternatives. They’re intended to be used for ground-up construction projects, not renovations. 

Construction loans force you to refinance your existing mortgage, usually onto a higher rate, will result in higher closing costs based on the full loan amount and impose a complicated draw and inspection process. In fact, for this reason, many contractors hate construction loans and some will refuse to work with them entirely.

If the only reason you’ve been considering a construction loan is to tap into your home’s future value and increase your borrowing power, take a look at a RenoFi Loan.

An FHA 203k or Fannie Mae HomeStyle Loan

If you have a lower credit score, you might want to consider an FHA 203k or Fannie Mae HomeStyle Loan to finance adding a deck or your backyard renovation.

These government-backed renovation mortgages let you combine the cost of buying (or refinancing) a property and the cost of renovations, and both allow you to borrow based on the home’s future value. 

But these loans both require existing homeowners to refinance their existing mortgage, come with higher than average interest rates and are known for their complex process that commonly causes delays.

That said, both FHA 203k Loans and Fannie Mae HomeStyle Loans have a lower credit score requirement than a RenoFi Loan, meaning that for some homeowners they’re going to be the only options that allow them to borrow based on the after renovation value.

If you’re not going to be able to qualify for a RenoFi Loan because your credit score is too low, consider these options and take a look at our FHA 203k Loans vs Fannie Mae HomeStyle Loans guide. 

A Personal Loan / Home Improvement Loan

Homeowners who haven’t got sufficient equity to be able to use a home equity loan or line of credit often turn to personal loans or credit cards as a way to finance a new deck, often without realizing that other options are available. 

These are commonly advertised under the guise of ‘home improvement loans’ or ‘backyard improvement loans,’ with many failing to realize that what’s being offered to them isn’t a bespoke loan product at all, rather an unsecured personal loan being marketed as a way to finance home improvements. 

Being unsecured, personal loans introduce an increased level of risk for lenders, meaning that they come with strict lending criteria based on your income, credit score and other factors including other loan and credit card debts and your debt-to-income ratio

Personal loans and other unsecured home improvement loans will typically reduce your borrowing power and increase your monthly payment compared to the alternatives due to higher interest rates and shorter repayment periods. It’s not uncommon for the interest rate on a personal loan to be between 8% and 15%, a figure that’s almost double what can be found with other types of financing.

Many personal loans and unsecured home improvement loans also come with origination fees, further increasing the total cost of borrowing. 

That said, personal loans are often the best choice for homeowners looking to borrow a lower amount of money for a smaller deck installation or where the deck isn’t part of a larger backyard renovation project, remembering that RenoFi Loans let you borrow upwards of $20k to $500k.

What’s The Best Way To Finance A Deck or Patio?

There are many different patio and deck financing options available to you, and the right choice comes down to your personal preferences and situation. However, an increasing number of homeowners are finding that RenoFi Loans provide them with the best balance, helping them to combine the benefits of a construction loan and a home equity loan, especially when a lack of tappable equity limits borrowing power and the higher interest rate on personal loans and credit cards means the most expensive monthly payments. 

But whatever option you choose to finance your new deck, it’s important that you consider the following when making your decision:

  • How much is your deck or patio going to cost?
  • Are you looking to build a deck as part of a bigger backyard renovation?
  • How much money do you need to borrow without reducing the scope of the project?
  • How much equity do you have in your home?
  • What’s your credit score and credit history?
  • Do you have any other debt on other loans and credit cards?
  • What is the maximum monthly payment you can afford? 
  • How long do you want to repay the loan over?

Why not reach out to our team today to find out more about RenoFi Loans, see whether it’s the right choice for you and get the ball rolling on your new decking or patio project.

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