Everything You Need To Know About Adoption Loans (2024)

Adoption loans are a financial solution for those hoping to bring home a child through adoption. Adopting a child can become expensive, and these loans are just one option to help cover those costs.

Adoption loans are available from various lenders, including banks, credit unions and online lenders. Before accepting a loan, it’s important to consider whether an adoption loan is right for you and your situation. In some cases, alternatives such as crowdfunding or grants may be better.

What Are Adoption Loans?

An adoption loan is a type of personal loan taken out to cover the costs of adopting a child. Adoption can be an immensely joyful experience, but it can also be costly. These loans are designed to be more flexible than traditional personal loans, with longer repayment terms and lower interest rates.

Adoption loans can cover anything from adoption agency fees to legal costs, travel expenses and even post-adoption expenses. With an adoption loan, families who may not have the financial means to adopt can receive the assistance they need.

Common expenses adoption loans can cover include:

• Court costs
• Attorney fees
• Home study
• Adoption agency fees
• Travel
• Re-adoption expenses in the case of an international adoption

How Do Adoption Loans Work?

Adoption loans are specifically designed for prospective adoptive parents and are available from banks, credit unions and online lenders. The loans typically have fixed interest rates and repayment terms of one to seven years.

To apply for an adoption loan, you must provide documentation of your adoption process and your financial information. After approval, you can use the loan to cover various adoption expenses, including adoption agency fees, legal fees and travel expenses—among other eligible costs.

Do your research and compare loan options before making a decision, as interest rates and fees can vary widely among lenders. Although adoption loans can be a helpful resource, keep in mind they’re still a form of debt that needs to be repaid. Before accepting one of these loans, consider your budget and what payments you can afford.

Adoption Loans vs. Grants

The adoption process can be a long and emotional journey, but the financial expense doesn’t need to be stressful. Before moving forward with any loans, consider any grants that may be available to you.

Adoption loans are typically offered by private lenders and are repaid with interest. Although the application and funding processes can be longer for a grant than a loan, grants don’t need to be repaid.

Grants for adoption-related expenses are available through the following:

• HelpUsAdopt.org
• National Adoption Foundation
• A Child Waits Foundation
• Gift of Adoption Fund
• Associate Home Loan Adoption Grant

How To Get an Adoption Loan

When considering an adoption loan, research and understand all the costs associated with the process. Talking with an adoption agency or attorney can help you calculate a realistic budget and provide guidance on the best way to finance your adoption.

You can get an adoption loan in a number of ways, but these are some of the most common options:

Personal Loan

Personal loans are unsecured loans offered by banks, financial institutions and online lenders. Personal loan interest rates vary greatly depending on your credit score, income and other financial factors but can range from 3% to 36%.

Repayment terms usually extend from one to seven years, and the loan amount can be between $1,000 to $100,000. The best personal loans provide a flexible and affordable option if you want to bring a child into your home but don’t have the funds readily available.

Personal Line of Credit

Personal lines of credit are credit accounts that allow you to borrow money as you need it, up to a certain credit limit. The interest rates are usually lower than for credit cards and may be comparable to personal loans—though borrowing limits may be higher.

Unlike personal loans, you can access a personal line of credit as needed rather than receiving a lump sum, and you only pay interest on the balance you withdraw. This makes it easier to finance expenses spread out over a long period, as is common with an adoption.

Home Equity Line of Credit

A home equity line of credit—or HELOC—allows you to borrow against the equity you’ve accumulated in your home. Since HELOCs are secured by your home, this type of loan typically comes with a lower interest rate than a traditional credit card or personal loan. However, your lender can repossess your home if you fail to repay because it serves as collateral.

Repayment terms are flexible, and the amount you can borrow varies depending on your equity. As with a personal line of credit, you can tap a HELOC as needed to reduce interest payments.

Where To Get an Adoption Loan

Adoption loans often come in the form of traditional personal loans or lines of credit, so there are several places to obtain financing. These are some of the most common places to get an adoption loan:

Traditional Financial Institutions

Traditional lenders like banks and credit unions can provide personal loans to help you fund your adoption. These established institutions often have competitive interest rates and offer different loan options that fit your needs. Keep in mind, securing a loan may involve extensive documentation and a review of your finances.

Online Lenders

Online lenders offer personal loans for adoption expenses with typically more streamlined application processes and faster funding speeds than traditional banks. This can make it easier to obtain an adoption loan quickly—though you may end up paying a higher interest rate in exchange for the convenience.

Many online lenders don’t charge origination fees or other additional costs. If you have a low credit score, it may also be easier to qualify for an adoption loan through an online lender.

Adoption Organizations

Depending on your needs and demographics, you may qualify for an adoption loan through an organization like ABBA Fund or Pathways for Little Feet. However, many organizations offering financial assistance for adoptions only lend to Christian families; some dictate that families be “traditional” or have two parents.

Adoption Loan Alternatives

An adoption loan may seem like the best option, but it’s not always the most practical. Adoption loans may have high interest rates and sometimes require collateral, like a home or car, which a lender can take possession of if you fail to make payments. Fortunately, there are alternative options to consider when it comes to adoption funding, including:

• Donations from friends and family. If you feel comfortable, ask friends and family for monetary contributions. Let them know that all donations are welcome, regardless of the amount. Social media is a great way to connect with potential donors in your network or even strangers who may be willing to help.
• Crowdfunding. Crowdfunding websites like GoFundMe are an effective way to raise money quickly for your adoption-related expenses. There are also adoption-specific crowdfunding sites like AdoptTogether. This option allows you to reach a much wider audience and increase the chances of reaching your fundraising goal.
• Employer adoption assistance. Some employers offer adoption benefits, such as reimbursem*nt for travel and legal fees or even paid parental leave for adoptive parents. Check with your employer to see if they have any programs that could help offset adoption costs.
• Federal adoption tax credit. The federal adoption tax credit can help cover qualified adoption costs like reasonable and necessary adoption fees, court costs and attorney fees, traveling expenses and other expenses directly related to a legal adoption. The credit is limited to $15,950 per adopted child for adoptions finalized in 2023.
• Foster care adoption. Adopting a child from the foster care system can be significantly less expensive than pursuing a private adoption. Some organizations specialize in helping families navigate the process of becoming certified foster parents and eventually adopting foster children.

It’s important to consider all options and work with financial experts who can help you make the best decision for your situation. Remember, there is no one-size-fits-all solution when it comes to adoption funding, but there are multiple options available for you to explore.