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There’s nothing better than stepping out your back door on a hot summer day and jumping in your own pool. A swimming pool can also affect your mortgage application, though.
So be careful when looking to buy or refinance a home with a pool. That pool can cause delays in the mortgage process, or drown your loan application altogether.
“If there’s a swimming pool, it either has to be in working order, or it has to be removed, filled in, basically not exist anymore,” says Karen Stubrud. She is a loan officer and certified mortgage planner at Mortgage Advisory Group in Marysville, Washington.
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Will a swimming pool affect your mortgage application?
Stubrud worked with a client who wanted a reverse mortgage, but had an empty, aging swimming pool on the property. Most reverse mortgages are FHA-insured Home Equity Conversion Mortgages (HECMs), and FHA guidelines are particular about swimming pools. “They don’t want it to be a health hazard or a safety hazard that there’s a big gaping hole in the ground.”
So what did the client do? “How they handled it was that they filled it in,” says Stubrud. They broke apart the edges of the pool and threw the pieces in the hole. Then they completely covered the entire area with dirt. The pool ceased to exist.
This aging homeowner didn’t have the money to get the pool in working order, so there were no other options. Still, Stubrud says the client did bring up an alternative idea. “They actually wanted to keep it and they were going have this subterranean greenhouse. I said, ‘Nope, that’s not going to work.’”
The client didn’t get their greenhouse, but they did pass the all-or-nothing test when it comes to the pool.
Why do mortgage lenders care about a swimming pool?
Many homeowners believe that what’s on your property is your business. That’s partly true. However, you invite scrutiny to almost every inch of a home when you decide to finance it with the lender’s money. It’s true for FHA loans as well as any other loan type.
It boils down to safety. Lenders don’t want their money going to finance unsafe property. A pool can be a falling danger or a breeding ground for bacteria. Either way, it’s a hazard to the health of the occupants. Not to mention it opens the homeowner up to lawsuits.
The same standards would apply to missing stairs outside the back door, handrails, or exposed lead-based paint. A lender needs the home to be a safe, long-term residence before they lend on it.
What if I want to repair the pool?
Repairing the swimming pool to get it into working order will allow the loan process to continue.
When buying a home, this could be a tricky situation. It’s risky to use your own funds to make repairs on a home that’s not yours yet. That’s especially true of pool repairs, which can be expensive. But don’t expect the seller to agree to pay for repairs either.
There may be another way to make repairs, however. “The borrower will need to obtain a bid for the necessary repairs,” says Sarah Bohan, VP of Corporate Relations at MSU Federal Credit Union. If the repairs will take place after the closing, lenders often hold more than the bid amount in escrow. Fannie Mae, for example, requires 120% of the estimated cost (or the full contract price for a fixed-price contract). FHA says only that the escrow must be sufficient to cover the cost.
In this way, repairs can be made after closing with the money you deposit up front. You receive back any money left over after everything’s done.
But don’t count on this solution, says Bohan. “Many lenders are not able to allow for repairs after the mortgage closes because they sell their loans on the secondary market and need to deliver the loan within a set timeframe.”
Make sure your lender allows for repairs after closing before you agree to buy a home with a decrepit pool.
USDA loans & swimming pools
All loan types follow the same general rule: the swimming pool must meet safety standards. But one loan type, the USDA Rural Development home loan, adds a point about the appraisal.
“Rural Development is a 100% financing program, meaning the borrower is not required to put money down to purchase the home,” says Bohan. The lender and appraiser decide how a pool affects the appraised value and the loan amount.
In some cases, a swimming pool may not add value to the home, but the appraiser has to determine that.
Un-agreeing to buy a home with a damaged pool
Many times a homebuyer agrees to buy a home, but the home inspection finds part of it unsatisfactory. In this case, that’s the pool.
Luckily, you can back out of the agreement based on the home inspection contingency. That part of your purchase contract exists for such occasions.
You can refuse to buy the home unless the seller pays for repairs. If that doesn’t happen, you can usually get your earnest money back, depending on the terms of your contract.
The lender’s denial letter can also help you get out of a purchase agreement, says Bohan. “Typically, the buyer has provided the seller with an earnest money deposit. With a lender denial letter, this can usually be refunded.” But consult your real estate agent about the part of your purchase contract called the financing contingency. Bohan says, “It does depend on the terms outlined within the purchase agreement.”
The key is to tread lightly when looking at homes with in-ground pools. Don’t “jump in” to any decisions (pun intended). Consult your real estate agent and loan officer before considering a home with a sub-par pool.
Check your home buying eligibility. Start here (Nov 12th, 2026)
