How to Pay for a Swimming Pool: Financing Options

Adding a swimming pool is a financial commitment, involving construction and ongoing costs like maintenance and utilities. Understanding financing options is important, as different methods offer distinct advantages and repayment structures. This allows homeowners to select a funding strategy that aligns with their financial situation and long-term goals.

Leveraging Your Own Funds

Using personal funds, such as savings, avoids interest payments and debt, leading to significant cost savings. This limits the total expenditure to the pool’s cost, without additional financing charges.

Funds can also come from non-retirement investment accounts, though consider potential capital gains taxes or impact on long-term strategies. Financial gifts from family or other sources are another interest-free payment option.

Self-funding avoids loan interest, which can add thousands to the total cost. It also eliminates the need for credit checks, loan applications, and ongoing monthly payments, providing financial independence and peace of mind.

Home Equity-Based Financing

Leveraging home equity is a common strategy for financing improvements like a swimming pool. Home equity loans, also known as second mortgages, provide a lump sum repaid over a fixed term with a fixed interest rate. As of August 2025, average fixed interest rates for home equity loans range from approximately 8.23% for a five-year term to 8.38% for a ten-year term. This option offers predictable monthly payments.

A Home Equity Line of Credit (HELOC) functions as a revolving line of credit. Borrowers can draw funds as needed up to a set limit during a specific draw period, often with variable interest rates. The national average HELOC rate was around 8.12% in August 2025, though rates vary based on credit profile. After the draw period, a repayment period begins where both principal and interest payments are required.

Another option is a cash-out refinance, which replaces an existing mortgage with a new, larger one. The difference between the new loan amount and the old mortgage balance is provided to the homeowner in cash. The entire new mortgage balance will be subject to the new interest rate. Lenders generally require sufficient home equity, often allowing borrowers to access funds while maintaining at least 15% to 20% equity in their home.

For home equity loans and HELOCs, a minimum credit score of 620 to 680 is typical, with 700 or higher preferred for better terms. Interest paid on these loans may be tax-deductible if the funds are used to buy, build, or substantially improve the home.

Personal and Other Loan Types

Beyond home equity, personal loans offer another way to finance a swimming pool. These loans can be either unsecured or secured. Unsecured personal loans do not require collateral, but they come with higher interest rates to compensate lenders for increased risk. As of August 2025, average unsecured personal loan rates range from approximately 6% to 36%, with an average around 12.57% for borrowers with good credit.

Secured personal loans require collateral such as a vehicle or a savings account. Providing collateral reduces the lender’s risk, often resulting in lower interest rates compared to unsecured personal loans. For personal loans, a credit score of 580 or higher is generally needed to qualify, while scores in the 700s are required to secure the most favorable terms. The specific interest rate and loan amount depend on the applicant’s creditworthiness and the lender’s policies.

Many pool contractors and companies offer direct financing options to customers, often through partnerships with third-party lenders. These programs can provide a streamlined application process and sometimes offer promotional rates. However, compare these rates and terms with those available from other lenders to ensure competitiveness.

Credit cards are unsuitable for financing a large expense like a swimming pool due to their high interest rates, often exceeding 20%. They are better reserved for minor costs, such as pool accessories, where balances can be repaid quickly to avoid substantial interest charges.

Key Considerations Before Securing Funds

Before committing to financing, assess your personal financial standing. Your credit score significantly influences interest rates and terms. A FICO score of 670 to 739 is considered “good,” while 740 and above is “very good” and often secures the best rates.

Evaluate your debt-to-income (DTI) ratio, which is the percentage of your gross monthly income that goes toward debt payments. Lenders use this ratio to determine your ability to manage additional debt. Most lenders prefer a DTI ratio below 35% to 36%, though some may approve loans with higher ratios depending on other factors. A lower DTI indicates reduced risk to lenders and can improve your chances of loan approval and better terms.

When preparing to apply for financing, gathering necessary financial documentation in advance can streamline the process. Lenders request proof of income, such as recent pay stubs and W-2 forms from the past two years. They also require tax returns, especially if you are self-employed, along with bank statements to verify assets and financial stability. A valid photo identification and proof of address are standard requirements.

Estimate the total cost of pool ownership before determining the funding amount. The average cost for inground pool installation can range from $44,300 to $86,500, with an average around $66,000, but luxury options can exceed $135,000. Beyond initial construction, consider ongoing expenses. These include annual maintenance, which can range from $1,000 to $4,000, or $960 to $1,800 for basic maintenance. Up to $3,000 to $6,000 may be needed including utilities and minor repairs. Utilities like electricity and water, increased homeowner’s insurance premiums (potentially $17 to $25 per month), and potential increases in property taxes due to enhanced home value should all be factored into the overall financial plan.