CalHFA ADU Loan Options

CalHFA ADU Loan Options


The CalHFA ADU grant program is a great opportunity for people with low-to-moderate income levels to finance an ADU. A stipulation of the program is that you need to receive a loan from a pre-approved lender in order to qualify for the grant. Here are your different CalHFA ADU loan options.

Why Do You Need A Loan?

The CalHFA ADU grant is only for pre-construction costs. You will still need to find a way to finance your construction labor, materials, and finish materials costs. Since this grant is for low-to-moderate income homeowners, they will not be able to pay out of pocket for the rest of the costs. That is why a loan is required before the grant can be given. They need to ensure you qualify for a loan and can afford the rest of the ADU construction before they give you the money for the pre-construction.

Approved Loan Lenders

More approved loan lenders are being added to the list as time progresses, but as of now, there are several you can choose from. A few approved loan lenders include:

You can talk to an ADU professional in your area to learn more about other approved loan lenders.

Loan Types

You have a variety of loan types available to you from the approved lenders. A few of them include:

  • Cash-Out refinancing
  • Home equity loans & HELOCs
  • Renovation loans
  • Construction loans

Planning your budget early on and working with an ADU professional can make getting approved for a loan much easier.

Loan Weaknesses

There are two major weaknesses of most approved loans. They often require you to refinance and already have a permit for your ADU project. Refinancing could cause your mortgage interest rates to go up, costing you more money in the long run. Having a permit already means you will have had to dish out a bunch of money towards planning, designing, and city fees. If you don’t have that kind of money readily available, this may not be doable for a lot of people.