There are several common options for financing your patio project, including personal loans, home equity loans, and credit cards. The best way to finance a deck depends on several factors, such as the cost of the project, your credit score, and whether you’re able to qualify for a low-interest loan or an interest-free credit card. Consider these common deck financing options:

Personal loans

Personal loans are installment loans that provide borrowers with a lump sum of cash to cover personal expenses. This type of bridge financing is available from traditional banks and credit unions as well as online lenders. Personal loan APRs vary between 4% and 36%, depending on the qualifications of the borrower. Most lenders require a minimum credit score of at least 670, although some financial institutions specialize in borrowers with fair or poor credit.

Choose a personal loan to finance your patio if you need access to funds quickly and don’t want to use your home as collateral. Also, make sure you have enough monthly cash to repay the loan quickly.

Home Equity Loans

A home equity loan is a fixed interest loan that allows homeowners to borrow against the equity in their home, which is the value of the home less mortgage debt. This type of financing is repaid over time and, because it is secured by the house, usually comes with low interest rates (3.25% to 7.94%, in August 2022).

Home equity loans are usually available from banks and credit unions, and they are disbursed as a lump sum of cash. To be eligible, borrowers must have a minimum credit score of 680, plus 15% to 20% home equity and a debt-to-income ratio (DTI) of 43% or less.

Home equity loans are best if you have sufficient equity and want to receive a cash lump sum to pay for the deck construction. However, keep in mind that you risk losing your home if you cannot make your payments.

Home equity lines of credit

A HELOC gives homeowners access to a revolving line of credit that uses the equity in the borrower’s home as collateral. The borrower can draw on the line of credit as needed and will only pay interest on the outstanding balance. This makes HELOCs ideal for long deck projects that can be completed over time.

HELOCs are available from traditional banks and credit unions, and they have similar requirements to home equity loans. In general, borrowers must have a credit score of at least 620 to qualify, and most lenders require the homeowner to have at least 15% to 20% equity. Consider this option if you have enough equity in your home and prefer to withdraw the funds gradually, but remember that the lender could foreclose on your home if you can’t meet your payments.

0% APR Credit Cards

A 0% APR credit card offers an initial promotional period of interest-free borrowing to qualified applicants. Consumers with a credit score of at least 670 have the highest chance of being approved for a 0% interest card. The promotional rate usually lasts around six to 18 months, although it can extend up to 21 months. Once the 0% period is over, the APRs vary between 13% and 28%.

A 0% APR credit card may be the best way to finance a deck due to low borrowing costs. However, it can be difficult to qualify for 0% APR credit cards, and they only offer savings if you have enough income to pay off the balance before the 0% period ends.

Contractor financing

Some contractors offer in-house financing for building decks and other home improvements. With this type of financing, the entrepreneur can offer a loan through a third-party lending partner, such as a local credit union. APRs and interest rates vary but are generally similar to those available with personal loans.