Swimming Pool Financing: 7 Sources for Your Pool Loan

You can already picture it: kids in the water, weekends in your own backyard instead of a crowded community pool. The only thing standing between you and that pool is the price tag.

Here's the good news: most pool owners don't pay cash. Below are seven ways to finance a swimming pool, plus what lenders look for, so you can choose the option that fits your budget and start building.

Before You Sign: 5 Things to Check in Any Pool Loan

Whatever financing you choose, confirm these five things first:

• The exact monthly payment, and how much goes to interest vs. principal

• Whether the rate is fixed or variable

• The repayment term

• Any early payoff penalties

• Any fees (origination, broker, appraisal)

Secured vs. Unsecured Pool Loans

Secured loans use your home as collateral. You get lower rates, higher amounts, and terms up to 20 years, but approval is slow, fees add up, and your home is on the line if you can't repay. Few lenders offer them for pools anymore.

Unsecured loans need no collateral, just decent credit (usually 620 or higher). Approval is fast, and these make up the vast majority of pool loans today, funding everything from standard builds to full pool remodels. Rates run higher, and loans arranged through online brokers typically add about $1,000 in fees. To skip broker fees, work with a pool builder that coordinates financing in-house at no charge and will confirm that in writing.

7 Ways to Finance Your Pool

1. Bank Loan

Start with the bank that already holds your checking account or mortgage. Your payment history is right in front of them, which can speed up approval. Terms typically run 12 to 144 months; watch for rates that climb on longer terms.

2. Credit Union Loan

Credit unions are member-owned nonprofits, so rates and fees usually beat banks. Not a member? Joining is often as simple as living in the right county.

3. Credit Card

Some builders accept cards for part of the project, like equipment or the final construction phase, and some take the full amount if you cover the roughly 3 percent processing fee. Card rates are high, so map out your repayment plan before you swipe.

4. Home Equity Loan

Borrow a lump sum against the portion of your home you own. Rates are low, approval is relatively quick, and interest may be tax deductible for home improvements. You can use your current mortgage lender or shop for a new one.

5. Home Equity Line of Credit (HELOC)

A HELOC works like a credit card with your home's equity as the limit, and you pay interest only on what you draw. That's perfect for pools, which are built and paid for in stages: draw $10,000 at excavation and pay no interest on the rest until you need it. One caution: HELOC rates are variable.

6. Savings-Secured Loan

Also called a share secured or passbook loan, this uses your savings balance as collateral. Rates are excellent, approval is fast, and a credit check may not be required, which makes this a strong option if your credit score is low.

7. 401(k) Loan

Borrow from yourself and pay yourself back with interest, typically prime plus 1 to 2 points. Best when you're expecting cash soon (a bonus, tax refund, or home sale) that lets you repay quickly. Repay within five years or face a 10 percent penalty.

How to Qualify

Lenders look at four things:

• Credit score. 620 or higher for most unsecured pool loans; higher scores earn lower rates.

• Income and employment. Expect to show pay stubs or tax returns. Self-employed? Bring recent personal and business returns.

• Debt-to-income ratio. Unused credit cards and open lines count as potential debt. Closing accounts you don't use can help you qualify.

• Loan-to-value ratio. Only applies to secured loans.

Find Out What You Qualify For

You don't need a pile of cash to start building. You need the right loan.

• Run the numbers. Use our free pool loan calculator to test loan amounts, rates, and terms until the monthly payment feels right.

• Get pre-approved. Complete the free, no-obligation pre-approval form and a financing specialist will walk you through the options that match your credit.

Summer is coming either way. Be swimming in your own backyard when it gets here.