Financing your Backyard Pod
We’re here to help you bring your dream backyard to life. Through our partnership with Frost Bank and trusted lenders like LYON Financial and HFS, we offer flexible financing options-including construction loans, HELOCs, home equity loans, and no-collateral plans-to fit your budget and needs.
Which Loan Is Right for You?
Disclaimer: This quiz is for informational purposes only and does not constitute financial advice. Please consult with a lender or financial advisor for personalized recommendations.
Different Loan Types
Key features:
- Borrow up to 80–85% of your home’s value, minus your mortgage balance.
- Repay in equal monthly payments over a set term.
- Your home is collateral-risk of foreclosure if you default.
- Often called a “second mortgage.”
- Need at least 15–20% equity in your home.
- Good credit and low debt-to-income ratio usually required.
- Upfront fees and closing costs may apply.
Summary: A home equity loan is a useful way to access cash for your backyard pod or ADU project, but comes with the risk of losing your home if you can’t repay.
Key features:
- Revolving credit-withdraw funds as needed, up to your limit.
- Draw period (typically 10 years), then repayment period (10–20 years).
- Variable interest rates (some lenders allow fixed-rate conversion).
- Your home is collateral-risk of foreclosure if you default.
- Flexible and potentially lower rates than unsecured loans.
- Only borrow what you can comfortably repay.
How it works:
- Submit project plans, budget, and timeline for approval.
- Funds are accessed in increments (“draws”) as each phase is completed and inspected.
- Interest-only payments during construction.
- After completion, convert to a standard mortgage.
- Short-term (6–48 months).
- Flexible funding-only pay interest on what you use.
- Covers land, labor, materials, permits, and more.
- Requires detailed plans and a qualified builder.
- Higher interest rates and more documentation than standard mortgages.
- Inspection required for each draw.
How it works:
- Lender calculates Debt Service Coverage Ratio (DSCR) by dividing net operating income by annual debt payments.
- DSCR above 1.0 is required (many lenders look for 1.20–1.25 or higher).
- No personal income documentation required; qualification is based on property cash flow.
- For real estate investors, not owner-occupants.
- Can be used for single-family rentals, multifamily, or other income-producing properties.
- Minimum credit score and down payment required.
- Streamlined approval for investors.
- No need for personal income verification.
- Helps expand investment portfolios.
- Higher interest rates and down payments than conventional loans.
- Only available for investment properties.
Key features:
- No collateral required-your assets are not at risk.
- Higher interest rates than secured loans.
- Requires good or excellent credit.
- Failure to repay affects your credit score.
- No risk of losing property if you default.
- Fast approval and funding.
- Flexible use for any purpose, including backyard pods and ADUs.
- Higher interest rates and stricter approval requirements.
- Potential for collection actions if you default.
Our Partners:
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Frost Bank
Frost Bank is a well-established Texas-based lender offering secure financing options like home equity loans and construction loans. We have a trusted lender at Frost we can connect our clients with directly, making it easy to explore these options with expert guidance. It’s an excellent choice for clients looking to leverage their home’s equity or secure a construction loan through a reliable, local institution.
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LYON Financial
Lyon Financial is a trusted financing partner specializing in home improvement and outdoor living projects, offering tailored loan programs with extended terms and low, fixed rates. They work closely with clients and contractors to streamline the financing process from application to funding. Lyon is a great fit for clients seeking flexible, long-term financing options with personalized service and support.
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HFS Financial - Home Improvement Loans
HFS Financial specializes in home improvement loans, offering fast, unsecured financing options with no equity required. They provide funding with flexible terms and competitive rates, helping clients move forward with their dream projects quickly and confidently. It's a great solution for clients who want to get started without tapping into home equity or going through a lengthy approval process.
We handle everything from permits to installation.
Estimate monthly payments with our calculator.
Loan Calculator
Disclaimer: This calculator provides an estimate for informational purposes only. Actual rates, terms, and monthly payments may vary based on your credit profile and lender requirements.
