Example of what you can do with a deck loan: deck overlooking wooded backyard off of living room

Deck Financing: What Are My Options?

Hanna Kielar5 minute read
November 22, 2021

A backyard deck can be a great outdoor space to host a family barbeque, enjoy your morning coffee and everything in between. If you’re ready to add a deck onto your home, the first step is to calculate the total cost, and then decide how you’re going to pay for it.

Although building a new deck can come with a hefty price tag, there are several ways to finance your project to make it a worthwhile investment. Let’s take a look at some of the best ways to pay for the construction of a new deck.

How Much Does It Cost To Build A Deck?

Before diving into deck building, it’s important to understand the costs associated with the project. According to HomeAdvisor, the cost to build a deck typically ranges between $4,083 and $11,290, with an average cost of $7,685.

If those figures give you sticker shock, don’t panic, the total cost of a new deck varies based on the size of the deck, the types of materials used and the price of labor. For example, plans for a smaller, wooden deck will be significantly less expensive than a composite deck with a large square footage.

4 Deck Financing Options

Now that we understand the average cost of adding a deck onto your home, let’s review the ways you can get financing for it.

Personal Loans

A personal loan is a popular method of financing the construction of a new deck. This type of unsecured loan is available for any kind of major purchase, which means that you can use it to pay for anything from deck materials to labor costs. Plus, it’s available through most banks, credit unions and online lenders.

If you qualify for a loan for a new deck, you’ll typically receive your lump sum payment within a few business days, and then you’ll begin repaying the debt in monthly installments. This perk of fast funding is particularly helpful when working under a construction deadline.

Keep in mind that your interest rate and loan terms are determined by your overall creditworthiness. If you have a higher credit score, you’ll most likely receive a lower interest rate, meaning that you will owe less over the life of the loan.

0% Introductory APR Credit Cards

Another way to finance your deck project is to open a 0% introductory credit card. However, the key to using this type of credit card is to pay off as much of the debt as possible before the promotional period ends. Once the promotional period expires, the regular interest rate will kick in and you’ll have to repay the remaining amount at a much higher cost.

This payment method typically requires a good or excellent credit score to qualify. If you qualify, you can pay off the deck construction cost during the credit card’s promotional period and avoid making any interest payments.

Home Equity Loan Or Line Of Credit

A home equity loan is a secured loan that requires you to borrow against the equity of your property. This type of loan is a common payment method for home improvement projects because it offers low interest rates and fixed monthly payments. However, it can be risky to put down your house as collateral for a loan.

If you’re uneasy about taking out a home equity loan, consider a home equity line of credit (HELOC). This option is similar to home equity loans in that it’s also secured against the equity in your home, but HELOCs have variable rates that allow you to only borrow and pay interest on the funding that you need. This can be beneficial to homeowners who incur additional expenses during the deck building process. If you choose this funding option, be prepared for your interest rate to fluctuate.

Builder Or Store Financing

In some cases, you can get financing directly from your deck builder. Not all deck builders offer this option, and the terms and conditions will vary based on the company’s policies. If you’re interested in receiving financing directly from your builder, be sure to learn about the details of their program, such as fees and surcharges, before signing on the dotted line.

If the company building your deck doesn’t offer financing, another option is to apply for funding options through a national home improvement brand, such as Lowe’s. Before submitting your financial information for a credit check, carefully review the store’s interest rate and loan term policies.

How To Compare Financing Options For A New Deck

When shopping around for the best deck financing option, it’s important to keep the following factors in mind.

  • Annual percentage rate (APR): Whether you take out a personal loan or a home equity loan, the APR is the total cost of the loan, including fees and interest. When comparing loan options, you ideally want to get the lowest APR possible.

  • Repayment terms: One of the primary factors when comparing loan options is the repayment term, which indicates how long you’ll be repaying the debt. Some lenders may offer 5 – 7 year repayment plans with lower monthly rates, while others may offer 2 – 3 year terms with higher monthly rates.

  • Personal qualifications: As mentioned above, some deck financing options are only available to borrowers with good credit scores and low amounts of debt. When comparing funding options, be sure to take your personal financial status into account.

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How Do I Get A Personal Loan Or Home Equity Loan?

If you’ve chosen to move forward with a personal loan or home equity loan to finance your future deck, the next step is to submit your application. Let’s take a look at how to apply for both of these types of loans.

Applying For A Personal Loan

If you’re interested in learning how to get a personal loan to fund your deck construction, you’ve come to the right place.

Before sending in your application, it’s helpful to shop around to multiple lenders to ensure that you’re receiving the best loan terms possible. The pre-application stage is also a great time to double-check your credit report to ensure that everything is accurate and updated.

Once you’ve chosen a loan lender, submit your formal application and financial information. Most lenders will request your credit score, income, debt-to-income ratio, savings information and employment history.

If you’re approved for the personal loan, you’ll receive the lump sum deposit within a few business days. Rocket LoansSM even offers same-day funding for personal loans so that approved borrowers can access their funding faster.*

Applying For A Home Equity Loan

Compared to personal loans, the application process for home equity loans requires a lot more paperwork. Since loan lenders need to ensure that you have enough home equity and income to afford the monthly payments, they have to complete a more in-depth evaluation of your finances.

To apply for a home equity loan, you’ll need to prepare copies of the following documents: pay stubs, bank statements, most recent tax returns, W-2 forms and credit card statements. Loan lenders will pull your three-digit FICO® credit score, as well as three credit reports, each maintained by the national credit bureaus of Experian®, Equifax™ and TransUnion®.

Keep in mind that home equity loans usually require higher credit scores to qualify. Most lenders expect a FICO® Score of 740, and applicants with excellent credit are more likely to receive favorable interest rates and higher loan amounts.

Final Thoughts

If you’re planning to build a deck, you should determine your financing plan before moving forward with the project. Luckily, there are payment methods to suit every need and budget, which can help you secure the outdoor entertainment space of your dreams.

Ready to move forward with a personal loan? Apply today with Rocket Loans.

*Same day funding is available for clients completing the loan process and signing the Promissory Note by 1:00 p.m. ET on a business day. Also note, the ACH credit will be submitted to your bank the same business day. This may result in same day funding, but results may vary, and your bank may have rules that limit our ability to credit your account. We are not responsible for delays that may occur due to an incorrect routing number, an incorrect account number or errors of your financial institution.

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Hanna Kielar

Hanna Kielar is an Associate Section Editor for Rocket Mortgage focused on personal finance, recruiting and personal loans. She has a B.A. in Professional Writing from Michigan State University.