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Updated: Jan 27, 2023

Swimming Pool Loan: How to Finance a Swimming Pool

Learn how to finance a new pool with a swimming pool loan, which may come in many forms with varying interest rates and collateralization.

Installing a swimming pool in your backyard creates your own outdoor oasis. As you relax and cool off on your own property, every day can feel like a vacation.

But, swimming pools aren’t cheap. 

In-ground pools can cost an average of $20,000 on the low end and upwards of $100,000 on the high end. And frankly, many people don’t have that type of cash in reserves.

Fortunately, lack of cash doesn’t mean you have to put off your dream of installing a swimming pool.

Here’s a look at different financing alternatives to design the backyard of your dreams.

How to Finance a Swimming Pool

Even if you have money in savings, you might prefer “not” draining your personal funds on a swimming pool purchase. 

Options for financing a swimming pool include:

1. Personal loan

Personal loans can be used for just about any purpose. Some people apply for one when financing a large or expensive item, such as a swimming pool. 

These loans are available from multiple sources, including banks, credit unions, and online lenders. But these loans aren’t created the same, so it’s important to understand how they differ. 

There are two types of personal loans: secured and unsecured. Secured personal loans are easier to get. The downside, though, is that you have to pledge personal property as collateral. 

Personal property includes items of value such as a car title or other vehicle title. If you don’t pay back the personal loan, the lender can take your property as repayment.

Unsecured personal loans, on the other hand, do not require collateral. But while these loans are an option, they’re not available to everyone. 


Typically, it’s harder to get a personal loan if you have bad credit. And even with good credit, unsecured personal loans have higher interest rates, which can increase your total loan cost.

2. Home equity loan

Another option is to get a home equity loan.

This involves borrowing against the value of your home, in which case you’ll receive a lump sum of money to pay for a swimming pool.

Home equity loans typically have fixed rates, resulting in predictable monthly payments.

These are convenient, especially if you have enough equity in your house. In most cases, you’re able to borrow up to around 80 percent of your home’s equity.

The biggest benefit of a home equity loan:

The interest rate is usually lower than the rate on a personal loan. Also, the interest on the loan might be tax-deductible, if you itemize your tax return.

The downside:

Your home acts as collateral.

So if you don’t pay back a home equity loan, there’s the risk of foreclosure. In addition, home equity loans involve closing costs, and you’ll end up owing more on your house.

3. Home equity line of credit

A home equity line of credit or HELOC is similar to a home equity loan.

This option also allows you to borrow against the value of your home, up to around 80 percent of your home’s value.

But again, a HELOC means you’re using your home as collateral. So there’s the risk of foreclosure if you don’t repay the line of credit.

But again, a HELOC means you’re using your home as collateral. So there’s the risk of foreclosure if you don’t repay the line of credit.

The main difference between a HELOC and a home equity loan is that you don’t receive a lump sum with a line of credit. Instead, you’re given access to a credit line that you can tap on an as-needed basis. 

The average draw period with a HELOC is 10 years. So once you’ve paid back funds used for the swimming pool, you can continue to draw on the home equity line of credit for other purposes.

The interest on a HELOC might be tax deductible, too.

Keep in mind, though, home equity lines of credit have variable interest rates. Rising interest rates could result in higher monthly payments.

4. Cash-out refinance

Are you looking to get a lower mortgage rate? If so, consider a mortgage refinance with a cash-out option. 

Refinancing is the process of getting a new mortgage to replace an existing mortgage.

The new mortgage can have a cheaper interest rate, longer term, or you can switch to a different home loan program. If you have enough equity, you can also borrow some of your equity and use funds to install a swimming pool.

Just know that refinancing involves repeating the home loan process.

You have to submit a new home loan application, get an appraisal, wait for an approval, and pay closing costs again.

And since you’re tapping your equity, your new mortgage balance will be higher than your original balance.

5. Pool financing

Another option is to get pool financing through the pool construction company. This can work in different ways. 

Pool companies that have their own finance department might allow you to make monthly payments directly to their company. 

Other companies, however, use third-party lenders to provide financing to their customers. If so, you can purchase the pool and apply for financing through the pool company. 

A benefit of using a pool company’s preferred lender is that you’re able to get funding faster, usually within a day. These are unsecured loans, too, so you don’t have to pledge personal property as collateral. 

The downside is that the pool company’s lender might charge a higher rater. 

How to Get Approved for  Pool Loan

Here are a few tips to help you get approved for a pool loan.

1. Check your credit

Your credit history plays a role in whether you’re approved for a pool loan. So before applying, get a copy of your credit report and check your credit score. 

You’ll need to review your credit report for any errors. If you find any mistakes, dispute these with the credit bureaus.

Credit report errors — especially negative ones — can decrease your credit score. This can make it harder to get approved for a loan, or you might pay a higher interest rate.

If you have a low credit score, take steps to improve your rating before applying for financing. 

You should pay your bills on time every month.

This makes up 35 percent of your credit score. Additionally, you should pay down debt. Another tip is to limit credit inquiries. Every credit application can reduce your credit score by a few points.

2. Gather documentation

Whether you’re applying for a personal loan or a mortgage refinance, you’ll have to submit documentation to the lender. 

The lender must review your income, employment history, and your credit history.

Income documentation you’ll need to submit might include recent paycheck stubs, W-2s, and tax returns.

If you’re applying for a home equity loan or a mortgage refinance, you’ll also need to provide bank statements.

3. Know your options

Make sure you fully understand the pros and cons of different financing options.

For some people, a personal loan makes more sense.

For other people, getting a home equity loan or a cash-out refinance is the better alternative. 

Whichever you choose, make sure you get rate quotes from at least three different lenders. This way, you can compare rates, terms, and other loan features.

Tips When Financing a Swimming Pool

Only borrow what you need.

You might be tempted to borrow a large sum of money.

However, it’s important to only borrow what you need.

You’re able to get a lower monthly payment and pay off the loan at a faster rate.

Think twice about using a credit card.

Some people might finance a swimming pool using a credit card.

But while an option, credit cards typically have higher interest rates than personal loans and home equity solutions.

If you carry a balance from month-to-month or year-to-year, you could end up paying thousands in interest.

Plus, a high credit card balance can potentially lower your credit score, making it harder to get future financing.

Don’t borrow from your 401(k)

You might also consider taking a loan against your retirement account to pay for a pool.

You can get a 401(k) loan with no credit check or application process. Just know that not all 401(k) plans allow loans, and borrowing against your retirement account means you’ll forfeit gains.

Plus, if you’re unable to repay the loan, you’ll pay a 10 percent early withdrawal fee.

Final Word

A swimming pool can elevate your backyard and create your own private oasis, but they aren’t cheap.

The good news is that many financing options can provide the cash you need to complete a project. 

Before moving forward, though, research your options.

From here, weigh the pros and cons of each. This will help you get a loan with the lowest rate and the best terms.