Warning: This loan type is is eligible for CalHFA ADU Grant.

If you have a fair amount of equity in your property, you may be able to do a cash out refinance to pay for your ADU. It is common for most people, subject to income and credit qualification, to be able to get a new maximum loan amount of 80% of their current property value. For example, if your home is appraised for $400k, then your maximum new loan amount would be $320k. If you owe $200k on your property then you could cash out up to $120k ($320k loan minus $200k owed). Don't forget that there are always closing costs involved as well.

Warning: This loan type is is eligible for CalHFA ADU Grant.

Home Equity Lines of credit are an additional loan (typically the 2nd loan) attached to your property ON TOP of your current mortgage. A HELOC typically has a higher interest rate than a complete new mortgage like the cash out option, but could make sense if the interest rate on your original mortgage is much lower than current rates. For some people and their specific situation this might be their best option.

This loan type is eligible for the CalHFA ADU Grant.

If you don't have enough equity to do a cash out, you may consider doing a renovation loan. The appraised value on a renovation loan is based on the "after improved value." This means that the appraisal will be based on the value of your home AFTER the ADU is added. These loans are a little bit more complex than your typical refinance, as there are inspections and construction draws and other elements involved. However this could be the right option for you.

Question: Do I have to live in the house in order to get the grant?
Answer: Yes, you must be the owner and occupant of the property to qualify for the grant.

Question: What kind of loan do I need to do to get the CalHFA ADU Grant?
Answer: It depends on your specific situation. Renovation loans will recognize the value of the property after construction is finished. Cash out refinances only recognize current value.

Question: How much can I get from the CalHFA ADU Grant?
Answer: Up to $40,000 to go towards your closing costs and pre-development costs.

Question: What are pre-development costs?
Answer: Anything that gets you right up until you start building the ADU.

Question: Can I use the grant towards the foundation and other construction costs?
Answer: No, those are not pre-development costs, those are construction costs.

Question: What are some examples of pre-development costs?
Answer: Some examples of pre-development costs would be, plans, permits, impact fees to city or county.

Question: What closing costs can be covered by the grant?
Answer: A whole bunch! That includes costs to buy down your rate, escrow fees, and other costs associated with getting financing to complete your ADU. On a typical renovation loan these costs can be between $5,000 and $20,000 depending on several factors.

Question: What happens if there is extra money left over from the grant?
Answer: The grant funds cannot be used towards anything other than the specific types of items listed above, so if there are only $30,000 in pre-development and closing costs then you would only receive a grant of $30,000.

Question: Do I qualify for the grant and the loan?
Answer: Maybe! We'd need a full loan application to evaluate your readiness for the loan and grant. Click down below to get started!