Image of mom holding her child after finalizing adoption papers.

Adoption Loans And Grants: How To Finance Your Adoption

Hanna Kielar4-Minute Read
UPDATED: May 31, 2024


Adopting a child could cost tens of thousands of dollars, or it might be nearly free, depending on the type of adoption you pursue.

If your adoption plan is a costly one, you have plenty of options to help cover the costs, from grants and tax credits to low-interest-rate loans, personal loans and home equity loans.

Here’s a look at how much adoptions can cost, and how you can ease the cost of bringing a child into your home.

The Cost Of Adoption

Adopting a child through the U.S. foster care system usually requires little expense on your part because the state agencies running the system want to encourage family adoptions.

Families adopting through U.S. foster care receive financial assistance through Title IV-E of the Social Security Act. Adoptive families first receive a one-time reimbursement for any adoption transaction costs they incur. They also receive monthly maintenance payments to help cover the care of the child they’ve adopted.

Because of this assistance, adoption through the foster care system often costs families nothing.

Other types of adoption are far more costly. The Child Welfare Information Gateway of the U.S. Department of Health & Human Services says adopting a child from a private agency can cost from $20,000 to $45,000. The agency says that it can cost up to $50,000 to adopt a child from another country.

The adoption process can also accrue additional costs for adoptive parents. These can include a home study (a review of the parents’ home environment), legal fees, parenting education or training and, in some cases, medical care for the birth mother.

With private and international adoptions costing so much, it’s little surprise that families often have to look for financial assistance to help cover the expenses.

Adoption Tax Credits

The U.S. government gives some financial assistance in the form of a federal tax credit for those who adopt a child. According to the National Adoption Foundation, families who adopt can qualify for a tax credit in 2021 of as much as $14,440 for every child they’ve adopted.

This credit applies just one time for every adopted child. You can claim the credit when you file your income taxes for 2021.

There are limits, though. First, you must be adopting a child who is not your stepchild, and the child must be under 18. Your income will help determine how much of the credit you can claim. In 2021, families with a modified adjusted gross income below $216,600 can claim the full adoption credit. Those with incomes from $216,600 to $256,660 can claim a partial credit. Those with incomes above $256,660 can't claim the credit at all.

How much you spend on your adoption matters, too. If your expenses are less than the maximum of $14,440, you can only claim up to the amount of your adoption expenses. If your expenses are higher than that maximum amount, you can claim the whole $14,440 if you are eligible.

Tax credit sources: 

Adoption Grants

Several organizations offer grants to help reduce the expenses of parents who are adopting. These are ideal because you won’t have to pay them back.

There are limits to grants, though. Grants often won’t provide enough money to cover all of the costs of adoption. An agency might pass out a grant for up to $7,000. That will help lessen the cost of an international or private adoption, but it won’t cover all of it.

Some agencies also impose income limits. If your annual income is too high, you won’t qualify for a grant. Plus, the agencies that give them out often have a limited amount of dollars to pass out each year, meaning that not everyone who applies for an adoption grant will get one.

Still, grants can be important tools for parents hoping to reduce the cost of adopting. Here is a list of some agencies that award adoption grants:

Loans For Adoption With Low Interest Rates

Organizations also offer adoption loans that come with low interest rates. The negative here is that you will have to pay these loans back. You also might not be able to borrow enough from one organization to cover the costs of your entire adoption.

On the plus side, the interest rates attached to these loans are often below market rate, meaning that borrowing money is less expensive. Other agencies provide loans that come with no interest at all. You can use these loans as part of a package of financial assistance to help make your adoption more affordable.

Some sources for low-interest adoption loans include:

Personal Loans For Adoption

You can get a personal loan from a bank or other online lender to finance the costs of adoption. When you’re approved for a personal loan, your lender will provide you with a single lump-sum payment. You can then use these dollars to pay for whatever you’d like, including an adoption.

You’ll pay your personal loan back in monthly installments with interest. That’s why it’s so important to study the interest rate when applying for a loan. The higher this rate, the higher your monthly payment will be.

In general, you can expect a lower interest rate if your three-digit credit score is high. The best way to boost your credit score is to pay all your bills on time and pay off as much credit card debt as possible. These two steps will make a dramatic improvement in your credit score.

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Home Equity Loans

If you own a home, and you have equity in it, a home equity loan could be a good source of adoption funds.

Equity is the difference between what you owe on your mortgage and what your home is currently worth. If your home is worth $200,000 and you owe $100,000 on your mortgage, you have $100,000 of equity. If you have enough equity, you can borrow against it in the form of a home equity loan.

As with personal loans, your lender will give you a lump-sum payment that you pay back each month with interest. Home equity loans generally come with lower interest rates because your home is used as collateral. The downside here is that if you don’t pay your loan back on time, your lender could attempt to take ownership of your home through the foreclosure process.

Home Equity Lines Of Credit (HELOC)

A home equity line of credit, often known as a HELOC, is similar to a home equity loan in that the amount you can borrow is based on your home’s equity. However, a HELOC acts more like a credit card than it does a traditional loan, with the maximum amount you can borrow at any one time based on your equity.

Say you have $100,000 of equity in your home. Your lender might approve you for a HELOC with a maximum borrowing limit of $70,000. This means you can borrow up to $70,000 at any one time to pay for whatever you’d like. You only pay back what you borrow – if you borrow $40,000, you only pay that back.

Credit Cards

You can always turn to your credit cards to help finance the costs of your adoption. The problem here? Credit cards come with sky-high interest rates, sometimes as high as 20% and often higher than with a personal loan. If you run up your credit card debt to cover your adoption costs, you might end up paying far more because of these high interest rates.

The best way to use a credit card is to charge only what you can afford to pay off in full by your due date each month. If you don’t do this, your debt will grow quickly because of the high interest rates attached to your card. Because the adoption costs can be so high, it can be difficult for adopting parents to pay back what they borrow in full each month.

Using your credit cards to finance your adoption, then, can end up costing you far too much money.

Final Thoughts

Parents do have options when covering the costs of an adoption. In addition to grants and adoption-focused loans, personal loans and home equity loans are useful tools. The key when looking for loans is to search for low interest rates and fees. That will help reduce your monthly payments, and help you prioritize what you need for welcoming your new child into your home.

If a personal loan sounds right for you, get started with Rocket Loans® by getting prequalified today.

Rocket Loans does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

Hanna Kielar

Hanna Kielar is a Section Editor for Rocket Auto℠, RocketHQ℠, and Rocket Loans® with a focus on personal finance, automotive, and personal loans. She has a B.A. in Professional Writing from Michigan State University.