Adoption Loans: Compare Low-Interest Options

Adoption can be a wonderful—albeit expensive—experience. The process can take a few months to a couple of years, and various fees and expenses can add up. The total cost can run into the tens of thousands, an amount many people don’t have.

But that is no reason to give up hope. An adoption loan can help you fill in the gaps to make your adoption dreams a reality.

Adoption loans

Adoption requires a large personal and financial commitment. The process can take a few months to a couple of years, but it can sometimes take longer. Recent estimates show that domestic adoption costs about $25,000 to $50,000. For international adoption, the cost can rise to $80,000.

Installment loans and financing sources are available for prospective parents. These are our top-rated personal loan lenders:

Interest-free adoption loans and grants

Many organizations award adoption grants and interest-free adoption loans to eligible individuals and couples trying to adopt. Some grants are awarded based on financial need; some are based on religious affiliation or other factors.

Grants and interest-free loans can help minimize some of the costs associated with adoption, but they’re unlikely to cover all your out-of-pocket expenses. Many grants are for $1,000 to $5,000. Interest-free loan amounts can vary by lender. 

For example, the Hebrew Free Loan Society loan program offers interest-free loans of up to $25,000 with no fees.

Other options include:

• Gift of Adoption Fund: Grants of up to $15,000 for qualified applicants to make possible the adoption of children in vulnerable circumstances in the U.S. and worldwide.
• Helpusadopt.org: Grants of up to $20,000 to help couples/individuals with the cost of their adoptions.
• Pathways for Little Feet: Offers interest-free adoption loans of up to $10,000.

Explore these options in addition to shopping around for the best personal loans. Your adoption agency can help you find organizations that offer grants and interest-free loans you may qualify for.

Best personal loans for adoption

Check out these lenders once you’ve explored your options for grants and interest-free loans. With excellent credit, you could qualify for a low-interest personal loan.

SoFi

Credible

Upgrade

LightStream

Pros and cons of personal loans for adoption

While you can use a personal loan for adoption, this approach has pros and cons. Keep these in mind before applying.

Pros

• Less waiting

  Adoption can be a lengthy process, but applying for a personal loan can prevent further delays.

• Fixed interest rates

  Interest rates are often fixed, so you will know exactly what your monthly payment will be.

• Doesn’t require collateral

  You don’t need to secure the loan with assets like a house or car.

Cons

• Interest costs

  Most personal loans have interest, which increases the total cost.

• Monthly payments

  Personal loans usually have monthly payments, which can put more strain on your budget.

• Credit score requirements

  You generally need a good credit score to qualify, which can be a limiting factor for some borrowers.

Alternatives to adoption loans

Sometimes, you may want or need to consider adoption loan alternatives, like if you can’t qualify. Fortunately, you may still have options if an adoption loan won’t work.

Employer benefits

Some employers offer adoption assistance as part of their benefits package. The structure of these benefits can vary by employer, with some offering lump sums and others offering reimbursement for certain fees. Lump sums typically range from $1,000 to $15,000. They may also offer partial reimbursement for up to 80% of a given expense.

Fundraising

If you don’t mind contacting your local community, you can create a campaign on a platform like GoFundMe. There are also adoption-specific crowdfunding platforms, such as AdoptTogether. You can make your campaign entirely online or organize events like bake sales, garage sales, or benefit dinners.

Friends and family

Contact family and friends directly if you aren’t uncomfortable publishing your adoption fund. They may be willing to give you a gift toward your adoption, or you can get an interest-free loan. Either way, this can be a way to get you closer to your goal without worrying about added interest costs.

Home equity or refinancing

For many people, their home is their most valuable asset. You might consider a home equity loan if you can’t qualify for a personal loan or the interest rate is too high. With these loans, you borrow against the value of your home. Often, the rate is lower, and you can borrow more.

Another option to consider is refinancing. For instance, with cash-out refinancing, you take out a larger mortgage, pay off your existing mortgage, and pocket the difference. You can use that to pay for your adoption.

With either of these options, your home will be collateral on the loan, which means you must make your payments.

Ask the expert

Erin Kinkade

CFP®

One consideration when taking out a loan for adoption is still being able to confirm your sound financial condition when being approved for adoption. I suggest making a budget to save, researching all available grants, and potentially using a GoFundMe account or similar method to acquire the capital. Other options could be from trusted family members and friends who have the means and want to support your adoption. Navigating these initial avenues before applying for a loan could result in needing to borrow a lower amount.

What is the adoption tax credit?

The adoption tax credit reimburses adoptive parents for related expenses. A tax credit is a dollar-for-dollar reduction in the income tax you owe. You are eligible for the credit if your adjusted gross income (AGI) is $239,230 or less.

If your income is higher than $239,230, the credit starts phasing out; when your AGI hits $279,230 or higher, you’re no longer eligible.

This credit can be applied to any necessary adoption costs, such as legal fees, agency fees, court costs, and travel expenses. You can still take the credit even if your adoption is unsuccessful, but in these cases, you must wait until the next tax year to claim it. 

The tax credit is also available whether your adoption is domestic or international, but this affects when you can claim it. You can claim the credit when the adoption is finalized, so you could wait a year or more. But once you get it, you can apply the funds to any adoption loans you took out.

How the type of adoption affects cost

You can pursue adoption in several ways, and this can affect how much financing you need. 

Foster adoption

Foster adoption typically comes with fewer out-of-pocket costs. When you adopt through foster care, the foster agency often covers the cost of a home study and other expenses.

You do have the option of using a private agency to help speed up the foster adoption process. This will incur extra fees, but you may be able to receive reimbursement from the state once the adoption is finalized.

The child will come to live with you as a foster child while you begin the adoption process. 

Foster adoption benefits include monthly payments to help cover the cost of the child’s care; the child will also have access to medical care. You’ll continue receiving financial and medical assistance once the adoption is final.

Domestic adoption

Many parents want to adopt an infant through private domestic adoption and will use an agency or adoption lawyer to assist them during this process. This is more expensive.

Private adoption costs can hit $50,000. The majority of these expenses are adoption agency application and program fees; however, the costs could be higher depending on the birth parents’ medical expenses.

Agency fees can be $15,000 to $30,000. Some agencies offer a sliding scale with costs based on income.

International adoption

The price of an international adoption depends on the country you’re adopting from. This adoption chart is a helpful resource that outlines the average costs of each country. For example, you can expect to pay between $33,000 and $38,000 to adopt from Bulgaria or the Philippines.

FAQ

How does having a personal loan affect my credit?

A personal loan can impact your credit score in a few ways:

• Credit inquiry: When you apply for a loan, the hard credit inquiry may temporarily knock a few points off your credit score.
• New account: Opening a new credit account will reduce your average age of accounts, which can negatively impact your credit score. Also, the new debt can potentially impact your credit.
• Payments: Missing a payment by 30 days or more could significantly and negatively impact your credit. Conversely, making on-time payments can help you build and maintain good credit over time.

Credit score calculations are complex, so it’s impossible to say exactly how a personal loan can impact your score. However, using credit responsibly, in general, will help improve your credit history in the long run.

Can I do anything to help improve my loan terms?

Improving your credit score can help you get better loan terms. Lenders typically offer the best rates to borrowers with good or exceptional credit. Your loan amount and repayment terms can also impact your interest rate, so it’s worth adjusting your loan size and terms to see which could get you the best rate. 

How we chose the best personal loans for adoption

Since 2017, LendEDU has evaluated personal loan companies to help readers find the best personal loans. Our latest analysis reviewed 1,029 data points from 49 lenders and financial institutions, with 21 data points collected from each. This information is gathered from company websites, online applications, public disclosures, customer reviews, and direct communication with company representatives.

These star ratings help us determine which companies are best for different situations. We don’t believe two companies can be the best for the same purpose, so we only show each best-for designation once.

Recap of personal loans for adoption