Should I use a home equity loan to build a swimming pool?

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Adding a swimming pool has recently become a popular form of outdoor recreation. But homeowners need a lot of cash to pay for it.

From 2019 to 2020, the number of underground residential swimming pools has increased by 21%, according to the Pool & Hot Tub Alliance. They still have demand. The National Association of Realtors (NAR) recently reported that some homebuyers are willing to pay more for properties that already have swimming pools.

Swimming pools are expensive. The average cost to install an in-ground swimming pool is $37,000, and some projects can reach six figures. But rising house prices may increase your borrowing power. Homeowners received an average of $64,000 in equity financing in the first quarter of 2022, according to the latest Homeowner Equity Insights report from housing data firm CoreLogic.

A home equity loan can be a great way to finance your swimming pool if you don’t have the cash on hand to cover your expenses. However, home equity loans have their own advantages and disadvantages.

This is to know.

Pros and Cons of Using a Home Equity Loan for a Pool

Home equity loans have many great features, starting with tax deductions, low interest rates compared to other financing options, and fixed monthly payments. But they also have drawbacks.

return on investment

A home with a pool can sell for about $27,200 more than a home without it, so you can get a return on your investment. However, keep the location in mind. A swimming pool can add $95,393 in value to a home in sunny Los Angeles, according to a Redfin analysis. But in Boston, where it’s cold for at least six months, a swimming pool could actually reduce a home’s value by $15,484.

However, David Haas, a certified financial planner and owner of Cereus Financial Advisors, says the ROI on your home equity loan isn’t guaranteed. If you use a home equity loan to improve your home, you can add value to your home, which can supplement the equity you take out. But there is no guarantee that the pool will add value. And “if you’re doing something with the house that doesn’t add value, you’re just taking equity in the house,” Haas said. “If you need it later, you won’t have it, and you’ll be paying your mortgage longer.”

Remember, lenders generally limit the amount you can borrow to 85% of your home’s market value, minus the balance of your current mortgage. As a result, homeowners with little equity may not be able to obtain one of these loans.

tax deduction

Homeowners can deduct interest paid on home renovations, often including swimming pools. However, you must use Schedule A to itemize. If swimming pools are desirable or common in your area, they may increase the value of your home.

lower interest rate

Compared to other financing methods such as credit cards and personal loans, home equity loans typically have lower interest rates because the loan is secured by assets. This means your payments are predictable and you know the total cost of financing in advance.

Your home is collateral

A home equity loan is a second mortgage, so your property serves as collateral for the loan. If you miss a payment, the bank may foreclose. This poses significant risks to borrowers. “If you can’t make the payments, the house could be repossessed by the lender,” said Vikram Gupta, executive vice president and head of home equity at PNC Bank.

You also may not be able to borrow the amount you need if you don’t have a lot of time to build your assets.

Settlement Costs and Fees

Some home equity loans come with closing costs and other fees. These typically range from 2% to 5% of the total loan amount and may include application fees, origination fees, credit report fees, assessment fees, and more.


  • Relatively low home equity interest rates

  • The home equity rate is fixed

  • Interest is tax-deductible

  • You may get a return on your investment


  • Your home is at risk

  • You will pay the billing fee

  • You need enough equity to borrow money

  • Your home’s value may not increase

Alternatives to Pool Financing

You don’t have to use a home equity loan for pool financing. Here are some alternatives to consider:


A home equity line of credit also lets you tap into your home equity. However, instead of getting the money all at once, you can use a revolving line of credit secured by your home. You can withdraw funds up to the maximum amount, pay off the balance, and reuse the credit limit during the “withdrawal period”. After the draw period ends, you will repay the balance in full or in installments. Interest rates on HELOCs are usually variable, which means your payments may change over time, but you only pay interest on the outstanding balance.

cash out refinancing

A cash refinance loan is a type of mortgage loan that exceeds the amount you currently owe on your home. With the new loan, you’ll pay off your existing mortgage and keep the cash balance, which you can use toward your pool project. Mortgage rates have increased significantly so far through 2022, which means “cash refinancing may not be a good idea right now,” Gupta said. “Most customers with mortgages have likely refinanced within the past three to five years at attractive rates. By cashing in on refinancing, homeowners risk losing the high rates they locked in for their first mortgage.”

Personal Loans or “Syndicated Loans”

A “pool loan” is usually an unsecured personal loan that can be used to finance a swimming pool. Loan amounts range from approximately $1,000 to $100,000, and terms may vary from 2 to 7 years. Unsecured personal loans use your credit history and income to determine eligibility and loan terms. Compared to home equity loans, swimming pool loans typically have higher interest rates and may have lower loan limits. However, if you don’t have enough home equity to borrow or you don’t want to use your home as collateral, they can be a good option.

credit card

If you already own one or more pools, a credit card may be the fastest way to pay for your pool. Most credit cards are unsecured revolving lines of credit, which means your assets are safe if you default on your payments. But variable rates are often higher than what you’ll find on a home equity loan, and the line of credit on your card may not be enough to cover all the costs of the pool.

Supplier financing

Some providers, like Home Depot, offer financing options similar to home improvement loans. You will receive a payment and may receive a 0% introductory rate for a period of time, such as six months. If you pay off your balance within that time frame, you’ll avoid interest altogether. But check the terms as some of these loans charge deferred interest. Haas recommends this option if you don’t want to dip into your home equity.

Expert opinion: The best way to finance a swimming pool

When interest rates are high, a home equity line of credit (HELOC) is often the best option for financing a pool of funds. You only pay interest on the amount you borrow, so you don’t get stuck with high interest rates over the life of your loan as you would with a home equity loan. You may be able to save on interest costs if interest rates drop before your next drawdown from your line of credit.

Some homeowners use multiple financing methods to finance pools, Gupta said. For example, if you need quick funds, you can use a personal loan or a 0% credit card to pay your initial deposit. Meanwhile, start a home equity loan or HELOC application. Once your home equity loan or line of credit is approved, pay off the balance on your personal loan or credit card.

Average cost to build a swimming pool

According to Pool Research, the average cost to build a swimming pool is $37,000, but prices vary widely based on a number of factors. Pool size and type are the biggest cost drivers, and prices for labor and materials can vary by region or supplier. You’ll save a few bucks if you can do some of the work yourself – but you’ll need to make sure you have the time and experience. In addition to pool installation, you may also pay tens of thousands of dollars in maintenance costs over time.

fiberglass pool vinyl pool concrete pool
high end cost $62,000 $50,000 $200,000
low cost $17,000 $22,000 $30,000
average cost $33,000 $33,500 $60,000
Cost to maintain over 10 years $3,700 or less $13,000 or more $27,000 or more
Source: Pool Research

Frequently Asked Questions (FAQ)

What is a pool loan?

Pool loans are usually unsecured personal loans ranging from $1,000 to $100,000. You’ll receive the money in one lump sum at a fixed rate, and you’ll make monthly loan payments over a period of about two to seven years. Interest rates are usually between 6% and 36%, with the best rates available to borrowers with good or excellent credit. The pool does not serve as collateral, so you will need to qualify based on your credit history and income.

Can you finance a swimming pool while taking out a mortgage?

Yes, some mortgages allow you to borrow more than the home’s value to finance home improvements, such as a swimming pool. You’ll want to look for lenders that offer new construction loans or home improvement loans, such as Fannie Mae’s HomeStyle Renovation Mortgage.

Is there any risk in building a financing pool?

Using a home equity loan can be risky because you may not get back all of your investment when you sell your home. If that worries you, “Why not look around for other houses in your favorite area?” Haas advises. “You can buy a house with a pool instead of paying for a new pool.”

However, Gupta said homeowners shouldn’t expect a one-for-one return on any upgrade. “Enjoy it for yourself and your family and hopefully you get some, if not all, of it,” Gupta said. “If you pay $100,000 for a pool and list the home for $50,000 more, you’ll get a 50 percent refund and $50,000 worth of fun from the pool.”

What credit score do I need to fund a swimming pool?

Borrowers with good to excellent credit scores are more likely to get unsecured syndicated loans and receive low interest rates. To find the best way to finance your swimming pool, shop around with different types of financial institutions, such as online lenders, credit unions, and a combination of community and national banks. Credit unions may prefer to work with people with good or bad credit because they are a nonprofit.

Will a swimming pool add to the value of my home?

If your area and community requires a swimming pool, a swimming pool may add to the value of your home. Timing also matters, as more buyers are looking for pools during the pandemic. On the other hand, an above-ground pool usually doesn’t add to your home’s value.

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