Financing Solutions

Make Your ADU
Affordable

Explore flexible financing options designed specifically for ADU projects. From construction loans to home equity solutions, we help you find the right path to build your dream ADU.

Get Free Consultation (323) 591-3717
$150K-$400K Typical ADU Cost Range
$1,500-$3,500 Monthly Rental Income
20-35% Property Value Increase
5-8 Years Typical ROI Timeline
Financing Options

Ways to Finance Your ADU

Every homeowner's situation is different. Here are the most popular financing options for ADU construction in California.

Home Equity Line of Credit (HELOC)

Borrow against your home's existing equity with flexible draw periods and competitive interest rates.

  • Draw funds as needed during construction
  • Interest-only payments during draw period
  • Typically lower rates than personal loans
  • Keep your existing mortgage rate
Best for: Homeowners with significant equity (20%+ home equity)

Home Equity Loan

Get a lump sum based on your home's equity with fixed monthly payments and predictable costs.

  • Fixed interest rate for stability
  • Predictable monthly payments
  • Receive full amount upfront
  • Tax-deductible interest (consult tax advisor)
Best for: Homeowners who prefer fixed payments and have clear project costs

Cash-Out Refinance

Refinance your mortgage for more than you owe and use the difference to fund your ADU.

  • Access large amounts of capital
  • Potentially lower overall rate
  • Single monthly payment
  • Based on current home value
Best for: Homeowners with high-rate mortgages or substantial equity

Construction Loan

Short-term financing specifically designed for new construction, converting to permanent financing upon completion.

  • Designed for new construction
  • Funds released in stages
  • Converts to permanent loan
  • Based on after-renovation value
Best for: Larger ADU projects or homeowners with limited current equity

Personal Loan

Unsecured loans that don't require home equity, with quick approval and no collateral.

  • No home equity required
  • Fast approval process
  • No risk to your home
  • Fixed rates and terms
Best for: Smaller projects or supplemental funding with good credit

Government Programs & Grants

Many California cities offer incentives, grants, or low-interest loans for ADU construction.

  • CalHFA ADU Grant Program
  • City-specific incentive programs
  • Fee waivers and reductions
  • Low-income housing assistance
Best for: Homeowners willing to meet program requirements
Compare Options

Quick Comparison

Financing Type Typical Rates Loan Amount Approval Time Equity Required
HELOC 7-10% Up to 85% LTV 2-4 weeks Yes (15-20%)
Home Equity Loan 7-12% Up to 85% LTV 2-6 weeks Yes (15-20%)
Cash-Out Refi 6-8% Up to 80% LTV 30-45 days Yes (20%+)
Construction Loan 8-12% Based on ARV 30-60 days Varies
Personal Loan 10-20% $10K-$100K 1-7 days No

Rates and terms vary by lender and individual qualifications. Contact a licensed mortgage professional for current rates.

Our Process

How We Help You Finance

1

Free Consultation

Meet with our team to discuss your ADU goals, property details, and financial situation.

2

Project Estimate

Receive a detailed project estimate including design, permits, and construction costs.

3

Financing Guidance

We connect you with trusted lending partners and help you compare options.

4

Begin Your Build

With financing secured, we handle permits, design, and construction from start to finish.

Common Questions

ADU Financing FAQ

Most ADU financing options don't require a traditional down payment. HELOC and home equity loans use your existing equity, while construction loans may require 10-20% of the project cost. Personal loans require no down payment but have higher interest rates.
Credit requirements vary by loan type. HELOCs and home equity loans typically require 620+ credit scores, with the best rates for 740+. Construction loans may require 680+. Personal loans are available with scores as low as 580, though rates improve significantly above 700.
Some lenders will consider projected rental income from your ADU when calculating your debt-to-income ratio. This can help you qualify for larger loan amounts. We can connect you with lenders who specialize in ADU financing and understand this approach.
Financing timelines vary: personal loans can close in days, HELOCs in 2-4 weeks, and construction loans in 30-60 days. We recommend starting the financing process early, ideally during the design phase, so funds are ready when construction begins.
Yes! Studies show ADUs typically add 20-35% to property values in California, often exceeding construction costs. Additionally, rental income from your ADU can cover loan payments while building equity. It's one of the best ROI home improvements available.

Ready to Explore Your Financing Options?

Schedule a free consultation with our team. We'll help you understand your options and connect you with trusted lending partners.

Schedule Free Consultation Call (323) 591-3717