Adoption Loans: Definition, Interest-Free Options & More
Adoption loans can help families adopt a child sooner rather than later by allowing them to pay off the high costs associated with the adoption process over time. Some lenders offer loans specifically for adoption expenses, and may even have interest-free financing in certain cases. But it’s also possible to get an all-purpose personal loan or home equity loan to pay for adoption. Other options for adoption funding include borrowing from relatives, or the general public, as well as adoption grants. Unlike adoption loans, grants do not require repayment.
The ideal adoption loan is large enough to cover the full cost of the adoption – or, at least the share that the parents-to-be cannot afford in cash. Adoptions can cost anywhere from $15,000 to $50,000, according to the Department of Health and Human Services, depending on the type of adoption and whether the child is from the U.S. or another country. However, the costs are much lower, sometimes even free, if the child is adopted from foster care.
Adoption loans should also have low APRs and fees, ideally. Adoptive parents will want to minimize the expense of the adoption as much as possible, considering all the extra costs they’ll have after the adoption finalizes, from food to clothing to medical care for the new child. And naturally, borrowers will need to get a loan that they can qualify for with their current credit score.
Below, you can learn more about the various options for adoption loans, along with a few good alternatives.
Places to Get Adoption Loans
There are many potential sources of adoption loans. You’ll want to first look at options that are interest-free, and then move on to other lenders that offer loans at reasonable rates.
Various types of lenders provide interest-free adoption loans. Some are available to anyone, while others are religiously affiliated.
Interest-Free Adoption Loans
- Oxford Adoption: This nonprofit organization offers loans of up to $5,000 to prospective parents. The loans are for nine years total, with 0% interest for the first three years, 2% for the next three and 4% for the final three. They can be paid off any time with no penalty.Requirements to apply for a loan include a home study, two years of tax returns, a written statement explaining why your family is adopting and why you need a loan, a breakdown of your monthly expenses and more. Oxford Adoption will also pull your credit report, though they don’t disclose any specific credit score you need.
- ABBA Fund: ABBA Fund offers interest-free loans specifically to Christian couples looking to adopt children. Their average loan is around $6,000 to $8,000. These loans are paid back over a 36-month period. To apply for a loan, couples need to fill out an application that includes their plan for adoption, information about their finances, references, information on the child, and answers to various questions on their Christian faith.
- Hebrew Free Loan Association: HFLA lends to Jewish families in Northern California for a variety of purposes, including adoption, business, disaster relief, healthcare and many others. They don’t provide much information about their interest-free loans on their website, instead requiring potential applicants to call them for details.
Other Adoption-Specific Loans
Not all adoption loans are interest-free. However, there are plenty of loans for adoption expenses that charge low or reasonable interest rates.
- LightStream: LightStream is one of the best personal loan providers, and one of the only ones that specifies different APR ranges for different loan purposes. LightStream offers loans for adoption that range from $5,000 to $100,000 for 24 to 84 months. The APRs are 5.99% to 17.29%. LightStream reportedly requires a credit score of 660+ to qualify.
- National Adoption Foundation: The NAF offers adoption loans through a partnership with Citizens Bank. Loans range from $5,000 to $50,000 for 36 to 84 months. The APRs are 7.99% to 20.88%. These loans require a minimum income of $24,000. You’ll also reportedly need a credit score of 680+.
- America’s Christian Credit Union: This credit union offers adoption loans for up to 84 months with APRs ranging from 5.99% to 14.90%. Borrowers can get up to $50,000 in funding. ACCU doesn’t disclose a minimum credit score needed for approval, but you will need excellent credit in order to get their lowest rate.To be eligible for ACCU membership, you’ll need to be a member or employee of a church, ministry or school “aligned with Wesleyan Christian doctrine.” Immediate family of ACCU members are eligible, too, if they live in the same household as the member (regardless of their religious affiliation).
- A Child Waits: This foundation will offer loans of up to $10,000 for adoption, with a 3% fixed interest rate. The loans last for five years. Applying for a loan requires a host of supporting documents such as a monthly budget, an adoption expense form, two years of tax returns, a home study, a picture of the child and the child’s medical history. In addition, there is a $20 application fee.
Other Loans You Can Use for Adoption: Personal & Home Equity
Personal loans can be used for just about anything you want, and that includes adoption expenses. There are plenty of good options with no origination fees and low APRs for people who have credit scores of 660+. There are also options for people with lower credit scores.
Best Personal Loans for Adoption
|Lender||APR Range||Loan Amounts||Origination Fee||Credit Score*|
|SoFi||5.99% - 17.63%||$5,000 - $100,000||None||680|
|Wells Fargo||5.24% - 22.99%||$3,000 - $100,000||None||660|
|American Express||6.90% - 19.98%||$3,500 - $40,000||None||660|
|Best Egg||5.99% - 29.99%||$2,000 - $50,000||0.99% - 5.99%||640|
|LendingPoint||9.99% - 35.99%||$5,000 - $25,000||0% - 6%||585|
*According to the lender or multiple third-party sources
Home Equity Loans
A home equity loan is similar to a personal loan in that you can use it for anything, including adoption costs. It’s different in that the loan is secured by your house, meaning you face foreclosure if you can’t pay it back.
There are two main reasons to get a home equity loan for adoption expenses. The first is that you can potentially borrow a lot. The loan amount is based on a percentage of how much your house is worth, minus what you still owe on the mortgage. The second reason is that home equity loan APRs tend to be very low, around 4% to 8%.
But at the end of the day, if you’re trying to bring a new family member into your home, you may not want to risk your home as collateral.
Alternatives to Adoption Loans
You don’t need to get a traditional loan in order to finance an adoption. There are several different options you can pursue.
Crowdfunding: Online crowdfunding platforms have become more and more popular in recent years for financing all kinds of expenses. If you put your story out for people to see, they may be willing to generously help finance your adoption.
Borrowing from friends and family: People close to you, especially other family members, may be eager to help you pay for the adoption. Because of this, you may be able to get low interest rates and a long amount of time to pay the loan off.
Adoption grants: There are nonprofit organizations that offer grant money to people planning to adopt children. Grants do not need to be paid back, unlike loans. But you will need to submit an application. And you’ll be competing against many other parents-to-be for a limited amount of funding.
Notable Examples of Adoption Grants:
- National Adoption Foundation: Grants of $500 to $2,000, awarded four times per year. There are no requirements to apply other than having a home study and filling out a one-page application.
- A Child Waits: Grants of $7,000 or less, awarded year-round. Any U.S. or Canadian citizen adopting internationally can apply. The usual family annual income requirement is $130,000 or less, though people who make more can still call and inquire. Applying for a grant requires a $20 application fee, along with a cover letter explaining your situation, financial information, and more.
- America’s Christian Credit Union: Grants of $500, available only to members of ACCU. The only requirements are a short application and a 2-3 minute video or written story about your family and how the adoption or decision to adopt “has made an impact on your life.”
- Help Us Adopt: Grants of $500 to $15,000, awarded four times per year. There is no specific income requirement, but this is a “need-based” grant. Couples who don’t have any children yet receive priority.
- Show Hope: Grants of $5,000 on average, awarded six times per year. In addition to your application, you will have to provide two references.
- Gift of Adoption Fund: Grants of up to $10,000, awarded year-round. You must complete a home study to be eligible. The grants prioritize preventing children from entering the foster-care system as well as uniting biological siblings.
Should You Get an Adoption Loan?
An adoption loan can help bring greater happiness into your life by letting you be a parent – not to mention the fact that it can give a child a loving home. However, it’s important to remember that adoption expenses are only the very beginning when it comes to parenting costs. You might find it difficult to provide certain things for your child if you have to go thousands of dollars into debt to adopt.
In some cases, you might want to delay adopting until you can pay for some or all of the adoption costs in cash. Or, you could pursue funding the adoption through another method that doesn’t involve borrowing money, such as crowdfunding or getting a grant.
If you’re looking to find out more about navigating the adoption process, one resource you may find helpful is the Adoption Network Law Center website. The Adoption Network is a California-based organization that provides adoption information and advice to people who want to adopt as well as people looking to put a child up for adoption.
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