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Inground pool financing

What does a forever home really look like, and what’s missing? While some homeowners think that’s a kitchen or bathroom upgrade, others look at the yard and think about how to make the most of the outdoor space. That could mean adding an ADU or adding a little luxury such as an inground swimming pool. In this guide, we’ll help you to understand the different ways you can finance a pool and dive deep into the pros and cons of each.

Given that most homeowners should expect to spend more than $50k, choosing the method that lets you borrow the money you need with the lowest possible monthly payments is important.

We’ll introduce you to RenoFi Loans, a new type of home renovation loan that lets you borrow based on the future value of your home after the construction of your pool has been completed, and take advantage of market rates, as opposed to the higher interest rates of many alternatives.

We’re here to help you finance the construction of your swimming pool as affordably as possible and see the limitations of traditional home equity loans and lines of credit, a cash-out refinance, or other methods of pool financing.

Specifically, we’ll look at:

Best Ways to Finance A Pool

Swimming pool loans can have significantly different interest rates and some will undoubtedly allow you to borrow more than others. Below we’ll want to introduce you to RenoFi Loans and help you to understand why they’re an excellent option for any homeowner. We’ll compare them with traditional options; a home equity loan or line of credit, a cash-out refinance, construction loan, a HomeStyle loan or an unsecured personal loan.

RenoFi Loan

A RenoFi Loan allows you to borrow the money that you need to carry out home improvements or additions (in this case, the construction of an inground pool) based on your home’s future value. It’s a second mortgage that’s perfectly suited to this type of project.

While using equity has traditionally been the go-to way to fund improvements or additions to your home, this has its limits. And most homeowners will find that their borrowing power is limited.

Imagine you’ve only recently bought your home. And when we say recently, what we really mean is within the last five to 10 years.

The harsh reality is that you’ve probably not built up enough equity to pay for your pool, based on how many years it takes:

desktop tappable equity

tappable equity mobile

But a RenoFi Loan lets you borrow based on the value of your home after your pool has been installed. And given that this luxury addition will without a doubt increase what your home is worth, this is going to increase your borrowing power.

It means you can borrow the money you need to pay for your pool without having to find ways to reduce the cost or go for an alternative with higher interest rates and, subsequently, that would mean higher monthly payments.

A RenoFi Loan could be a great way to finance your pool project. The RenoFi Loan process makes financing simple!

Reasons Not to Use Traditional Options

Suppose you have enough tappable equity in your home. In that case, a home equity loan or home equity line of credit (HELOC) might be an option for you to use to finance the construction of your inground pool. But, as you learned above, unless you’ve lived in your home for many years, there’s a good chance that this won’t be the case. You no longer need to wait until you’ve got enough equity available when you can borrow against your home’s future value instead.

Using a cash-out refinance for your pool loan brings with it many of the same challenges as using a home equity loan, but you’ll also need to refinance, which often ends up being at a higher rate than your existing mortgage. And shockingly, this is the case for 60% of homeowners who refinance.

You could use a construction loan, a type of financing that, like a RenoFi Loan, lets you borrow based on your home’s future value. But we don’t recommend it. Why? Because you’ll not only be forced to refinance into a higher rate, you’ll also face higher closing costs and have to go through a complicated draw process for your contractor to get paid. And for this reason, some contractors actually refuse to work with this type of loan completely.

Let’s also clear up one thing; swimming pools cannot be financed using an FHA 203k Loan, given that these are considered luxury amenities on the list of restricted improvements that are not permitted.

The same is not the case with HomeStyle Loans, though, and it is possible to use these as a method of pool financing.

These loans come with several drawbacks, including higher interest rates, a requirement to refinance, and a lengthy and complicated process that often results in delays and higher fees.

If your credit score doesn’t allow you to qualify for a RenoFi Loan, consider a HomeStyle.

Reasons Not to Use A Personal Loan

You’ll often find that personal loans are marketed towards homeowners as ‘home improvement loans’ or even as more specific products, such as a pool loan.

But don’t be fooled into thinking that these types of loans are designed specifically for the type of project you’re able to embark on. Not at all.

These offerings are often high interest unsecured personal loans marketed for a certain use rather than being anything unique or offering distinct advantages over other alternatives.

And while you might find advertised pool loans, home improvement loans, or other personal loans that claim to let you borrow up to $100,000 or more, this is an ‘up to’ amount that’s only attainable by a very small number of applicants.

You see, the amount that you can borrow with these unsecured loans is usually based on your income, credit history, and your debt-to-income ratio. This means that many homeowners will have limited borrowing power with this type of loan, and face shockingly high interest rates, often between 8% and 15%.

And to help you understand the impact that these higher rates can have, just take a look at the difference in monthly payments on a $50k loan borrowed over 10 years at these two rates; 8% and 15%, compared with 4%.

Interest RateMonthly Payment
4%$506
8%$607
15%$807

A lower interest rate means lower monthly payments, so it’s in your interest to find the option that gives you the borrowing power to borrow the full loan amount you need at the lowest possible cost.

To put it simply, most people shouldn’t be using a personal loan to finance their new pool, nor should credit cards be considered for the same reasons.

Interest Rates for Pool Loans

One way to help decide which financing option is best for you is comparing loan rates - however, it’s important to remember that:

  • Rates vary, and yours will depend on your financial situation. The rates you read online may not reflect your own individual options.
  • You shouldn’t look at interest rates as a way to compare loan options in isolation. Each loan option might have different terms, potential closing costs or other fees, draws and inspections, or other important factors.
RenoFi LoansTraditional Home Equity Loan or HELOCPersonal LoansFannie Mae Homestyle LoansCash-out Refinance
Rates starting as low as 4.12%Average rate range is 3.25%-7.25%Average rate range is 3.99%-36%Average rate range is 2.65%-3.75% (This is a refinance of your primary mortgage - which will also require you to pay higher closings costs.)Average rate range is 2.65%-3.75% (This is a refinance of your primary mortgage - which will also require you to pay higher closing costs.)

Things to Consider for Swimming Pool Loans

Swimming pools are fast becoming one of the most popular additions that we want to make to our homes, and this comes as no surprise.

But before you give your contractor the go-ahead, you need to find a way to pay for the installation of your new pool, and here are the things that you need to keep in mind when considering your options:

  • What type of pool are you looking for and what’s it going to cost
  • How much money you need to borrow based on this
  • How much equity you have in your home
  • Your credit score and credit history
  • Any debt on other loans and credit cards
  • The maximum monthly payments you can afford
  • The timeframe that you wish to repay the loan over

While the best method of financing will depend on your individual circumstances, RenoFi Loans offer a solution that lets you borrow based on what your home’s value will be after construction is completed. They’re an option that we recommend you at least consider if you’re not already familiar with what they are and how they work.

Does An Inground Pool Add Value To Your Home?

Perhaps the million-dollar question that a borrower often asks before they’re about to begin construction is whether an inground pool will increase their home’s value.

And the simple answer is that yes, it probably will, but how much of the construction can be recouped in added value depends massively on the pool size, location, and other factors.

According to Bankrate, “many experts say having a well-kept pool can boost your resale value, especially an inground pool,” but “these are more coveted in warmer regions where they can be used year-round.”

And based upon estimates from HGTV, “Real estate experts estimate that an average 14x28-foot inground concrete pool potentially adds 5 to 8 percent to the real estate value of your home. If your property is worth $400,000, you’ll realize a boost to the value of your property of about $20,000 to $32,000.”

You may even find that if your neighbors have a swimming pool but you don’t, this can actually decrease your home’s value, making installing one all the more valuable.

While a pool maybe isn’t the most lucrative home improvements you can make, it shouldn’t always be about the money and the value it can add.

Make a decision based on what your family’s forever home looks like, and if that includes a pool, then go ahead and find the best way to finance it at the lowest possible cost.

You deserve it.

Should You Finance A Pool?

Most homeowners considering this type of home improvement project will be considering some kind of pool loan.

After all, very few people are lucky enough to have $50,000 or more available in cash without depleting their emergency savings, borrowing from their 410k, or turning to friends and family. And these options don’t come recommended in most scenarios.

But don’t lose sight of the reasons why you began considering the installation of an inground pool in your backyard in the first instance. We’re guessing that it was to add a little luxury to your home and to create an even more enjoyable outdoor space for the whole family.

If you’re still considering the different swimming pool loans, remember one thing; for many homeowners, a RenoFi Loan makes the most sense.

To learn more about whether this option may be able to let you borrow all of the money you need without the drawbacks of other financing options, we encourage you to get in touch and chat with one of our advisors or, alternatively, give the RenoFi Loan Calculator a try.

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