17 Frequently Asked Questions About Inground Pool Loans

—Answers for homeowners buying or remodeling a swimming pool

Financing is a popular approach that many homeowners use to pay for a new gunite pool or to remodel an aging one.

If you plan on financing a new backyard resort, it’s important to understand how home improvement loans work before you apply for or accept one.

Let’s look at some of the most common questions that arise from those considering a pool loan.

1. When financing a swimming pool, do lenders always put a lien on the borrower’s property?

Some home improvement lenders offer programs that are entirely unsecured. That means your home is not used for collateral—so no lien.

It is fairly common for other lenders to file a Uniform Commercial Code-1—better known as a UCC1. This provides lien rights to a property under specified conditions.

2.  What factors will lenders use when evaluating applicants for a pool loan?

Lenders want a strong FICO score, stable income, and a reasonable debt-to-income ratio.

In today's market, most require a score of at least 680. However, a few larger pool builders have access to lenders who will go lower.

If your score is less than optimal, it’s worth checking with your pool builder if they have special programs in place with lenders.

3.  I am self-employed. Does that make it difficult to get a pool loan?

Not usually. Lenders routinely approve deals for self-employed applicants.

Many offer “stated income” programs, in which there is no verification process for income sources. Lenders will issue approval relying only upon the applicant’s statement of income.

Other lenders require additional proof, such as a tax return, pay stubs, or bank statements.

Provided self-employment income can be verified with documentation, you should not have an issue whether the program uses stated income or requires verification.

4.  Say I want to finance only a portion of my pool. Will a lender do that?

Absolutely. All lenders will fund a partial amount of the price of an inground pool. They simply view it as though you provided more than the required down payment.

In most cases, the loaned amount will need to be for a minimum of $10,000 to $15,000.

5.  Can I use my credit card to buy a gunite pool?

It’s virtually unheard of for a pool builder to accept a credit card for this major construction project.

However, some will allow you to use a credit card for the down payment or for smaller amounts, such as contract addendums for additional items or upgrades (e.g., upgrade to a pebble interior finish, add 100 square feet of decking).

6.  When applying for a pool loan, will this trigger a “hard” pull that nicks my FICO score?

That depends on the lender and their review process.

Fortunately, the majority of lenders for pool financing provide preapprovals using only a “soft pull” approach.

However, once you decide to proceed with a lender, your credit application will be converted into a “hard pull” to finalize the approval.

If you are unsure about your credit, it’s always best to seek out a pre-approval that involves only a “soft pull” so there is zero impact on your FICO score.

7.  Can I pay my pool loan off early without pre-payment penalties?

In most cases, yes.

Today, the majority of home improvement financing programs are simple-interest loans. Therefore, most lenders do not impose prepayment fees or other penalties. However, always check before finalizing your loan.

8.  Should I sign a pool contract if I don’t have lender approval yet—and have not even seen its interest rates?

If you are satisfied with the pool contract and design you have been offered, then yes, go ahead and sign.

Here’s why: In most states, contractors are required to extend a rescission period after signing a contract. This provides customers time to explore financing options.

Ultimately, if you are unable to obtain financing, no contractor will make you build a pool you can’t pay for.

9.  If I sign a contract for a new pool, will I have to accept the loan terms?

The final decision on financing is always up to you; you can refuse or accept the rates as you wish.

Keep in mind that the pool contract is the governing document; the contract is entirely different from the financing agreement.

10.  Do I have to pay an application fee for a pool loan?

Most lenders do not charge to apply for a loan. You should be wary if a broker or lender asks for a fee upfront.

However, if you accept the loan, it is common to see associated administrative fees. Always check your written approval terms.

11.  I was already turned down for a pool loan. Should I try again with another lender or pool builder?

Although one lender did not approve your loan, it’s possible that another one can qualify you using different means.

However, if you know your credit profile might be borderline, it may make sense to wait a while and fortify your financial standing.

Credit Tip: In some cases; a credit score is lowered by a reporting error or a single outstanding balance from long ago (about which you may not even be aware).

It’s prudent to check for any potential blemishes by obtaining free credit reports via AnnualCreditRepot.com. Once issues like these are resolved, your score may bounce back.

In some cases, applying with another lender is worth a shot. That’s because each financial institution follows its own guidelines in evaluating borrowers.

Most gunite pool builders use the same two or three industry lenders. However, a few larger builders have arrangements with additional lenders with whom you can apply.

Although these large pool builders may use the same lenders, some may have negotiated with them to accept their customers with lower FICO scores.

12.  When it comes to getting a pool loan, does it matter who my pool builder is?

Generally, it does not matter who your builder is when applying for a pool loan.

But there are exceptions. When applying through a larger pool builder, the lender’s approval can be specific to that sole builder.

Also worth noting: If a pool builder has a poor track record with project completion, customer service, and financial stability, a lender may refuse to finance its customers. That could hinder your options.

On the other hand, some larger pool builders may have more clout with the lender—to your advantage.

Because these bigger industry players provide a steady stream of customers to the lender, they can procure better terms for their customers.

“Better terms” can mean longer loan terms, lower rates, and the acceptance of lower FICO scores.

13.  What is “stage funding” and why is it used?

When home-improvement lenders make payments to you or your contractor over certain phases of the project—vs. releasing the total amount upfront—it is referred to as staged funding.

For large, multi-phase building projects, structuring the financing this way makes good sense: Money is paid out only as work is completed.

This approach can protect consumers from less reputable pool builders. It also incentivizes builders to complete projects in a more timely manner.

For gunite swimming pools, lenders typically disburse payments in four stages: excavation, gunite, tile & coping, and plaster/interior finish.

14.  What should I consider about using a home equity line of credit (HELOC) to finance a pool?

Some borrowers prefer HELOCs; others don’t.

First, a HELOC is secured by a deed of trust against your home. That means a second mortgage.

The upside: because it is a secured loan, you may land a slightly lower rate or a longer term. With a HELOC, your borrowing power is limited to the amount of your current home equity.

Some HELOC rates are adjustable and fluctuate with the prime rate.

However, if rates are high when you obtain a HELOC, that could possibly work to your advantage: In the event rates come down in the future, you would benefit from moving to the lower rate.

Some HELOCs allow interest-only payments for a certain time period, keeping initial payments low. In some cases, the interest may be tax deductible; check with your accountant.

A HELOC can nick FICO scores in that it increases the percentage use of revolving credit. This may not matter to you if your score is high and can easily take a dip or if you have no plans on applying for other credit or maxing out your HELOC.

Many HELOCs have a prepayment penalty. However, a simple tactic can usually circumvent it: When you pay off the balance, just do not close out the loan.

15.  Can I get a loan to do a major remodel of my pool?

Yes, lenders that serve the pool industry often provide financing for major pool remodels. Typically, they want the loan to be for a minimum of $10,000 to $15,000.

16.  I don't know how much I will ultimately need to borrow; are there loans that function like a credit line?

Yes. These programs typically extend an “up to” approval for a certain amount.

You may apply for a $75,000 loan, and receive an approval “up to” a larger amount. In this program, you are free to use as much or as little of the approval amount as you like.

Say that your up-to amount is for $100,000. By the time your pool is finished, you drew only $75,000. The financing now converts to a $75,000 close-end loan (vs. $100,000).

Technically, this is an open-ended loan until you take the final draw. Thereafter, it converts to a formal, close-ended loan for only the amount you actually drew.

17.  Will an open-ended loan affect the “percentage used” of revolving credit on my credit report?

No. When pool construction is done, and you take the final draw, the financing converts to a close-end loan. Credit reporting bureaus do not categorize close-end loans as revolving credit.

Learn more or see if you qualify for a pool loan

Check out our in-depth article on swimming pool financing and sources for a pool loan.

If you are ready to get started on a new gunite pool or pool remodel, you can also apply here for a free, no-obligation, “soft pull” credit review / loan pre-approval.