Adoption may be an expensive process, but you have options when you’re looking to add a new member to your family.
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How do baby and adoption loans work?
Most baby and adoption loans are generally unsecured, meaning you don’t have to provide any kind of collateral in order to qualify. Depending on your circumstances, you can borrow up to $25,000 through an unsecured personal adoption loan. The maximum you qualify for depends on factors such as the lender you choose, your credit and the adoption details.
How much does adoption cost?
The costs of adopting a child vary significantly depending on the kind of adoption you’re pursuing. If you’re adopting a child through a county foster or adopt program, the process usually costs between $0 and $1,000. If you’re adopting a newborn voluntarily using the services of a non-profit organization, on the other hand, you may end up spending $10,000 to $25,000. Adopting a newborn by using an attorney can cost between $20,000 and $30,000.
If you wish to take the private domestic infant adoption route, you can use the services of an adoption lawyer or agency. The costs would vary depending on factors such as expenses borne by the birth mother, attorney or agency fees, background checks, failed adoption matches, out-of-state agency fees and travel.
Adoption agency fees can range from $5,000 to over $40,000. However, more than half fall within the $10,000 to $30,000 bracket. Some adoption agencies make use of sliding fee scales, where they charge fees based on your income.
Personal loans to consider for covering adoption costs
How can I pay for an adoption?
There are several different baby and adoption loans available depending on your circumstance.
Top 3 personal loan picks for financing an adoption
ProviderWhy we like itLoan amountsMin. APRMin. credit score
How can I get a competitive adoption loan?
The best way to get a competitive rate is to shop around and compare your options. Think about what you want to use your adoption loan and how much you need before going in so you know which points to prioritize.
- Interest. If you’re concerned about your overall loan cost, you might want to look into interest-free adoption loans before moving on to low-interest providers. That’s because interest is often the largest contributing factor to your loan’s cost — though sometimes fees come into play.
- Fees. Fees your lender may charge include application fees, disbursement fees, prepayment fees and late payment fees. Some interest-free adoption loans also come with monthly fees.
- APR. Your loan’s APR is an expression of its interest and fees as a percentage. It’s the easiest way to compare the cost of two loans — as long as they have the same term length.
- Eligibility criteria. In most circumstances, you need to have good credit to qualify. Some grant providers might require personal references from your pastor, employer, co-workers or friends.
- Turnaround time. The loan processing time can vary depending on which option you choose. If you apply for a personal loan or a peer-to-peer loan, you can receive the approved funds within days. When it comes to grants and subsidies, the process takes longer.
- Loan term. Your loan term is the amount of time you have to repay your loan. A longer term gives you lower monthly repayments, but you’ll pay more in interest. Short loan terms translate into higher monthly repayments but an overall savings on interest. Make sure you consider your current financial circumstances and the size of the repayments before requesting a specific loan term.
Adoption loan requirements
Eligibility for financing can vary depending on what type of loan you’re taking out. Adoption loans tend to have more specific requirements than your standard personal loan. In general, you can expect to meet the following requirements to qualify.
- Good credit. While not always necessary — there are bad credit financing options — you’ll need to have at least good credit to get the lowest rates.
- Income. You’ll need to make a high enough salary to prove to your lender that you’ll be able to afford your loan.
- Low debt-to-income ratio (DTI). Some lenders also compare your monthly income to your debt obligations when determining whether or not you can afford a loan.
- US citizen or permanent resident. Most lenders require borrowers to either be a citizen or have a green card when they apply for any type of financing.
- Age of majority. You’ll need to be at least the legal age to take out a loan in your state, which is 18 in most.
5 ways to keep adoption costs down
Once you’ve browsed through the ways you can pay for an adoption, you might be thinking: how else can I save money? Adopting a child may be expensive, but you can lower the cost or make a large loan a little more manageable.
- Apply for a tax credit. The federal government, along with some state governments, offer tax credits that can be used to offset the cost of adoption. It won’t save you money up front, but it can mean paying less come April.
- Build your credit. This may seem a little odd, but remember: the better your credit, the lower your interest rates when you apply for a loan. While you’re working on saving for your adoption, see if you can improve your score to increase your chances of scoring a good interest rate.
- See if your employer offers benefits. Some employers may offer assistance when it comes to adding a new member to your family. Whether this is a reimbursement or a lump sum that helps to cover the costs, looking into an adoption program sponsored by your employer could easily cut your adoption costs.
- Find a grant. Grants really are free money. You don’t have to pay them back, and there are grants out there specifically for families looking to adopt. Take your time to research and apply for as many as you can qualify for. After all, every little bit can help.
- Adjust your budget. This won’t necessarily keep adoption costs down, but it will help maintain your budget. If you can cut out things you don’t need, like changing that Netflix subscription into a library card, you can put that extra money towards your adoption fund.
When is getting a loan for adoption a good idea?
You might want to apply for a baby and adoption loan if
- You’ve applied for grants and still need financing. Go for the free funding first before applying for a loan — even interest-free loans can come with fees. You can potentially save hundreds or thousands in interest.
- You don’t have enough time to save up. Adoption can be a long and drawn-out process. Instead of getting funds to pay for all of your adoption costs at once, you might want to consider getting financing for your immediate needs and opening a high-interest savings account for future costs.
- You have funds coming in but you need money now. Grants can take a while to process, and tax credits aren’t available year-round. Look for a loan that doesn’t come with prepayment penalties so you can have the cash you need now and pay it back as soon as your money comes in.
What’s the best time to apply for an adoption loan?
This largely depends on what you want to finance. If you need money to pay for upfront fees at an adoption agency, you might want to consider applying for an online loan two weeks before your first payment is due so you can be sure to get your funds on time.
Many adoption-specific loans and grants require you to be at a certain stage in the adoption process before you can qualify. You’ll typically need to complete your homestudy before you can qualify and funds take a month or longer to come through.
What to look out for
- Payments you can’t afford. If you think you might have trouble repaying the borrowed money on time, avoid taking a loan in the first place.
- High rates. Be wary of taking a loan with a high APR, which increases the overall cost of the loan. Instead, check if you qualify for any grants or subsidies.
- Predatory lenders. Stay away from lenders that try playing to your emotions or promising low rates for bad credit without offering much evidence. Look out for companies that try to guilt you into spending more than you can afford.
Bottom line
Bringing in a new addition to the family is an exciting but expensive prospect. Compare your loan options and consider applying for grants and other funding opportunities so you can put the attention off of your budget and onto the process of growing your family.
Frequently asked questions
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