Swimming pool financing: 5 things to know before you take the plunge

A woman and her daughter floating in a poolImage: A woman and her daughter floating in a pool

In a Nutshell

If you want to build a swimming pool, you might be considering pool financing — meaning some kind of loan or credit you can use specifically for the project. Options can include unsecured personal loans, home equity loans, HELOCs or financing through a pool dealer. Each option has pros and cons, and some types of swimming pool loans are more expensive or difficult to qualify for than others.
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If your dream of a backyard includes kids splashing around or long days floating on a raft and sipping margaritas, perhaps you’ve thought about building a swimming pool. But an in-ground pool or hot tub can cost thousands of dollars — so how can you pay for it?

Plenty of options for pool financing are available. But swimming pool loans can be expensive, and they can sink you into long-term debt. Understanding all the ways you can pay for your pool can help you decide if you really want to borrow for the expense and what type of loan might be a good option for you.

Before you dive into a pool loan, here are five things to know about pool financing and important realities of pool ownership.

  1. You have multiple financing options
  2. Pool financing can be expensive
  3. It may be difficult to qualify for pool financing
  4. Don’t count on a big bump in home value
  5. A pool is expensive to maintain

1. You have multiple financing options

When it comes to paying for a pool, there are multiple types of financing to be aware of so that you can choose the best option for you.

  • Unsecured personal loans You don’t need to put up collateral for unsecured personal loans, which are typically offered by financial institutions like banks and credit unions, or by online lenders or peer-to-peer lenders. Though unsecured loans tend to have higher interest rates than secured loans, such as home equity loans. Most personal loans have repayment terms of about 12 to 84 months, so you’ll know exactly when your pool will be paid off.
  • Home equity loans or HELOCs Home equity loans and home equity lines of credit, or HELOCs, allow you to borrow against the equity in your home. Your home is used as collateral to secure the loan, so the interest payment on home equity loans can be lower than for some types of unsecured financing. And when you use the funds of a home equity loan to pay for improvements to the home that secures the loan, you may be able to deduct interest on your taxes if you itemize your deductions. The big downside is that your home is at risk of foreclosure if you don’t repay the loan as promised. Home equity loans are usually paid back over a longer term than personal loans (10 to 15 years in most cases), and you’ll need equity in your home to qualify.
  • Financing through a pool dealer — Some swimming pool dealers will help you arrange financing by forwarding your information to lenders. But dealer-arranged financing will usually be more expensive than other options on the market.

2. Pool financing can be expensive

Putting in a swimming pool is a huge expense, although the cost varies widely depending on the type of pool you install and other factors, like your location, pool size and the features you choose.

Here are some typical price ranges for different types of swimming pools.

  • Vinyl pools: $20,000s to $60,000s
  • Fiberglass pools: $20,000s to $40,000s
  • Concrete pools: $30,000 to $60,000

Keep in mind that these are just average costs. If you’re looking for the type of pool that could be featured on HGTV, with waterfalls, grottos, slides, an attached spa or other special features, you could end up spending $100,000 or more on your dream oasis.

And no matter the cost of your pool, borrowing to finance it means you also have to pay interest on top of the purchase price. The interest rate will vary by lender and the type of pool financing you choose. Interest rates can range from as low as about 5% APR for some loans to up to around 36% or higher for others, depending on different factors, including the lender, length and type of loan, and your credit.

Let’s say you borrow $40,000 for a pool and pay 10% interest on a 48-month loan. Your monthly payments would be around $1,015 per month and you’d pay $8,696.16 in interest. Your pool would end up costing you almost $49,000 thanks to the interest costs.

3. It may be difficult to qualify for pool financing

Even if you decide to pay the high interest costs associated with many swimming pool loans, there’s another possible obstacle to contend with — qualifying for swimming pool financing.

Lenders will consider different factors, including your credit history, when deciding if you’re eligible for a loan.

While some lenders may be willing to provide financing to homeowners with fair or even bad credit, these loans typically come with even higher interest rates. In this case, there’s a bigger consideration: If your credit needs work or you’re having financial difficulties, it might not be the right time to add the financial burden of buying, installing and owning a pool.

Working to improve your credit and your financial situation now might help you get a better pool-financing deal with a lower interest rate in the future.

4. Don’t count on a big bump in home value

If you’re assuming your pool will be a home improvement project to significantly increase the value of your home — and therefore make up for the cost when you sell the house — you may need to think again.

Swimming pools typically provide only a nominal increase in the value of your home — if any at all. In fact, House Logic indicates a new pool will typically increase the value of your home by a maximum of 7%, and you’ll see this increase only in ideal circumstances.

What are these ideal circumstances? A pool could make the sale of your home easier and is most likely to boost the value of your house if …

  • Your home is located in a high-end area and is one of few that don’t have a pool.
  • Your home is located somewhere warm where it can be used for most of the year.
  • A pool won’t take up much of your lot space and would-be buyers would still have ample room for a garden or for children or pets to play.

Your pool should also be styled to fit your neighborhood, be relatively new, and in good condition if you hope to see the maximum return on investment for it.

Other factors can affect how much a pool could increase your home value, including the preferences of any buyers interested in your home.

5. A pool is expensive to maintain

When you’re figuring out the financing of your pool, don’t forget that costs don’t end once the pool builders leave your home.

Swimming pools require ongoing maintenance. That can mean big bills will keep coming for as long as you’re enjoying your backyard haven. Some of the expenses pool owners have to bear include …

  • Pool-cleaning equipment or a cleaning service
  • Water and water treatments
  • Lighting
  • A pool cover
  • Heating the pool

All these expenses can add up. In fact, HomeAdvisor indicates that basic upkeep for a pool runs around $1,200 to $1,800 annually, depending on location. And after factoring in potential repairs as well as higher utility costs, keeping your pool in ideal condition could run as much as $5,000 per year.

Depending on where you live, local code may also require the installation of a secure fence around your pool. This could add thousands of dollars to your initial installation costs.

Next steps

Ultimately, it’s up to you to decide if installing a pool will be worth the investment. Now that you’ve read up on swimming pool financing, here are some steps to take.

1. Weigh all the financial considerations, like the cost of pool financing and the expense of maintaining a pool, against possible benefits like home value, comfort and quality of life.

2. Consider saving up to pay for your pool in cash — or make a sizeable down payment to reduce the loan amount. This will eliminate or at least cut the amount of interest you’ll have to pay.

3. If you do decide to borrow, shop around and get prequalified by multiple lenders to identify the best possible loan offers for you. And as with any loan, don’t sign the loan paperwork until you know the total interest cost over the life of the loan, how much your monthly costs will be, and all the details of the loan term.

About the author: Christy Rakoczy Bieber is a full-time personal finance and legal writer. She is a graduate of UCLA School of Law and the University of Rochester. Christy was previously a college teacher with experience writing textbo… Read more.