How to Finance a Kit Plane Build: Staged Budgets, Home Equity and Refinancing at Completion
This guide is for builders who are funding an experimental amateur-built aircraft while it is still in the garage or hangar. It shows how to budget by build phase, which kinds of borrowing fit which phase, how to limit kit-deposit risk, and how to refinance once the airplane is flying.
Why can't a partially built kit secure a loan?
A lender's collateral has to be something it can value, insure and sell. A kit in progress struggles on all three:
- It isn't airworthy. Until an FAA inspector or designated airworthiness representative (DAR) issues a special airworthiness certificate, the project can't fly. Many projects are never finished.
- Its value is unknown. Workmanship can't be judged until the aircraft is inspected, and unfinished projects usually sell at a steep discount to the parts invested.
- Hull insurance for flight doesn't exist yet. You can often insure the project on the ground, but not the finished-aircraft value a lender would lend against.
So the realistic plan is: fund the build with money that doesn't depend on the airplane, then use the finished airplane as collateral later. For loans on a completed, flying E-AB, see experimental aircraft financing.
Budget the build by phase
Builds commonly run for years, and costs arrive in lumps. The engine, propeller and avionics are the largest checks and come near the end, which is where most builders need to borrow. The table below is an example allocation for planning on a two-seat, all-metal kit totalling $160,000. It isn't a price list. Replace each line with your kit maker's current prices and real quotes for the engine and panel.
| Phase | Typical timing | Example cost | Funding that fits |
|---|---|---|---|
| Tools, workspace and a build-skills class | Before the first kit | $8,000 | Cash |
| Tail (empennage) kit | Months 0–6 | $8,000 | Cash |
| Wing kit | Months 6–18 | $20,000 | Cash or savings |
| Fuselage kit | Months 12–30 | $22,000 | Cash or savings |
| Finishing kit (canopy, gear, cowling, controls) | Months 24–36 | $17,000 | Savings or HELOC draw |
| Engine and propeller | Months 30–40 | $45,000 | HELOC draw |
| Avionics, wiring and panel | Months 34–44 | $25,000 | HELOC draw or personal loan |
| Paint, interior, inspection and first-flight costs | Months 40–48 | $15,000 | Personal loan or cash |
| Total | About 4 years | $160,000 |
Three budgeting rules help most builders:
- Add a contingency. Hold back 10–15% for tools you didn't plan on, rework, shipping and price increases.
- Buy avionics late. Panels improve and prices move. Buying two years early ties up money in equipment that may be superseded before first flight.
- Price the finish line. The DAR or FAA inspection, weight and balance, flight-test insurance, transition training and the first condition inspection all come after the last kit is paid for.
Funding options compared
| Source | How it is priced | Main risk | Best use in a build |
|---|---|---|---|
| Cash flow and savings | No interest | Build slows if income drops | Tools and early sub-kits |
| Home equity line of credit (HELOC) | Usually Prime (7.00% as of Sept 2026) plus a margin, variable; often interest-only during the draw period | Your home is the collateral; the rate can rise | Engine, propeller and avionics, drawn when purchased |
| Home equity loan (fixed) | Fixed rate, lump sum | Home is the collateral; you pay interest on money not yet spent | A single large purchase such as the engine |
| Unsecured personal loan | Fixed rate set by your credit, often well above secured rates; short terms | High payment relative to amount | Smaller, late-stage costs you'll refinance soon |
| Securities-based line of credit | Variable, set by the brokerage | A market drop can trigger a call for more collateral | Short-term bridge for investors with large taxable portfolios |
| 401(k) loan | Plan-set rate, paid back to your own account | Lost market growth; the balance may come due if you change jobs | Last resort; limited to the lesser of $50,000 or 50% of the vested balance |
| Credit cards | High revolving rates | Costly if balances carry | Deposits only, paid off monthly |
Interest on home equity debt used for something other than buying, building or improving the home generally isn't deductible as mortgage interest. Confirm your situation with a CPA. For a wider look at non-aviation borrowing, see alternative aircraft financing.
Worked example: carrying the build debt
Say the $160,000 build above is funded with $60,000 of cash over the first three years, a $60,000 HELOC draw for the engine, propeller and avionics, and a $40,000 five-year personal loan for paint, interior and finishing costs. Using an illustrative HELOC rate of 8.00% (Prime plus 1.00%) and an illustrative personal-loan rate of 11.00%:
- HELOC, interest-only: $400 a month.
- Personal loan, 60 months: $870 a month.
- Total carrying cost while you finish and fly off Phase I: $1,270 a month.
The HELOC figure covers interest only; the principal is still owed. If the Prime rate rises, the HELOC payment rises with it.
Kit-maker payment schedules and deposit risk
Many kit makers sell a design as a series of sub-kits (Van's, for example, sells tail, wing, fuselage and finishing kits, with quick-build options for some), each with its own deposit, lead time and payment before shipping. Terms vary by manufacturer and change over time, so read the current order terms before you commit.
The risk in paying far ahead is the manufacturer's balance sheet. In December 2023 Van's Aircraft filed for Chapter 11 reorganization. Customers with open orders were asked to accept kit price increases of about 32% or cancel and pursue refunds as unsecured creditors, though Van's said it would apply prior deposits to the repriced orders (AOPA, Dec 5, 2023). To protect yourself:
- Order one sub-kit at a time, and don't prepay the engine or avionics years before you can install them.
- Keep deposits as small as the maker allows, and keep every invoice and order confirmation.
- Inventory each crate on arrival and report shortages or damage within the maker's claim window.
- Insure the project against fire, theft and hangar damage. A homeowner's policy may exclude it, so ask about builder or ground-only coverage.
Getting close to first flight?
Tell us the design, build cost and expected completion date. A financing specialist can outline refinance options with lenders in our network that take experimental aircraft.
Refinancing once the airplane is airworthy
The refinance is where the finished aircraft finally becomes collateral. The usual sequence is:
- Register the aircraft with the FAA. Amateur-built aircraft use an affidavit of ownership (AC Form 8050-88) in place of a manufacturer's bill of sale, along with the registration application.
- Pass the airworthiness inspection by an FAA inspector or DAR and receive the special airworthiness certificate and operating limitations.
- Fly off Phase I in the assigned test area and record its completion in the logbook.
- Get a hull insurance quote at the finished value, then apply to lenders with the full build file.
Lender appetite varies. Some want a period of flying or a first condition inspection behind the aircraft, and some limit or decline cash-out on experimental aircraft. The appraisal reflects what a buyer would pay for that design with that engine and panel, not what you spent.
Worked example: retiring the build debt
Twelve months after the personal loan was taken out, the finished airplane appraises at $150,000, which is $10,000 below the example build cost. A lender offering 75% of appraised value would lend $112,500. At the experimental starting rate of 7.78% over 15 years, the payment is $1,061 a month. The illustrative LTV is an assumption; confirm the actual figure with the lender.
- Pays off the $60,000 HELOC and the personal loan's remaining balance of about $33,650.
- Leaves about $18,850 after the payoffs, before closing costs.
- Replaces $1,270 a month of mixed, partly variable debt with one fixed payment of $1,061, and takes the lien off your house.
For the general refinance process, see refinancing your aircraft loan.
Records to keep so the refinance works
- A builder's log with dated photos of each major assembly, including the ones that will be closed up.
- Notes from EAA Technical Counselor visits, if you use the program.
- Every kit, engine, propeller and avionics invoice, with serial numbers.
- A record of who performed each task. It supports the amateur-built eligibility statement and answers the "who built it" question later.
- Engine and propeller logbooks, weight and balance, the equipment list and the DAR or FAA inspection paperwork.
- Flight-test cards and the Phase I completion entry.
Common mistakes when funding a build
- Carrying kit purchases on revolving credit card balances.
- Drawing the full HELOC on day one and paying interest on idle cash.
- Assuming the finished airplane will appraise at build cost.
- Paying a shop to do most of the building, which can take the aircraft out of the amateur-built category.
- Leaving the project uninsured on the ground for years.
- Skipping the insurance quote until after first flight, then finding the pilot requirements unworkable.
How this guide differs from related guides
This page is about paying for a build in progress. For loans on an experimental aircraft that is already finished and flying (lender criteria, appraisal, insurance and rates), see experimental aircraft financing. If you're still deciding whether to build or buy, and want to know what "experimental amateur-built" means in practice, read the first-time experimental buyer's guide. For factory-built light-sport aircraft, see MOSAIC light-sport financing.
Frequently asked questions
Can I get a loan to build a kit airplane?
Rarely against the kit itself. Aviation lenders generally want a finished aircraft with an airworthiness certificate as collateral, because an unfinished project may never fly and has a thin resale market. Builders usually fund construction with cash flow, savings, a home equity line of credit or a personal loan, buy sub-kits as they go, and look at an aviation loan only once the airplane is certificated and flying.
Is a HELOC a good way to finance a kit plane build?
It can suit a build because you draw only what you need, when you need it, and many HELOCs allow interest-only payments during the draw period. HELOCs are usually priced off the Prime rate (7.00% as of September 2026) plus a margin, and the rate is typically variable. The trade-off is serious: your home secures the debt. Confirm tax treatment with a CPA before assuming any interest is deductible.
Should I pay for the whole kit up front?
Usually not. Many kit makers sell in sub-kits, so you can match spending to progress. Prepaying years ahead exposes you to the maker's finances: when Van's Aircraft filed for Chapter 11 in December 2023, customers with open orders were asked to accept kit price increases of about 32% or cancel and seek refunds as unsecured creditors (AOPA, Dec 5, 2023). Keep deposits small and take delivery promptly.
Can I refinance my homebuilt once it is finished?
Often, yes, once it has its special airworthiness certificate and has flown off Phase I. Some lenders also want a period of flying or a first condition inspection behind it. As of September 2026, experimental/kit starting rates are 7.78% (FLYING Finance). Expect the appraisal to reflect market value, not what you spent, so the loan may not cover every dollar of build debt.
Can I use a 401(k) loan to fund an aircraft build?
Many plans allow loans of up to the lesser of $50,000 or 50% of your vested balance, generally repaid over five years through payroll. The money comes out of the market while it is lent, and if you leave your employer the balance may fall due quickly or be treated as a taxable distribution. Plan rules vary, so read yours and talk to a tax adviser first.
Does hiring someone to build my kit affect financing?
It can affect eligibility first. To be certificated as experimental amateur-built, the major portion of the aircraft must be fabricated and assembled by people building it for education or recreation. Paying a commercial shop to do most of the work can disqualify the aircraft from that category, which changes insurance, resale and lender appetite. Document who did what in your builder's log.