Get the 411 on Accessory Dwelling Units

  • Cheryl Hata & Lori Legler
  • 11/3/21

Accessory Dwelling Units (ADUs) are known by many names; grandma units, in-law suites, backyard cottages, secondary units, tiny homes, garage conversions and more. No matter what you call them, ADUs are an affordable, and innovated option for adding some much-needed housing in California. ADUs have grown exponentially in number as more cities, and counties allow them to be built, and as more homeowners become interested in them.

 

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Benefits to Owning an ADU

  • affordable

  • potential source of income

  • cost-effective construction

  • privacy for and from guests

  • added living space

  • provide independent living area for aging family members

  • added equity to your home

  • tax benefits

Funding an ADU Build

  • CalHFA ADU Grant Program: Effective on or after September 20, 2021, the CalHFA ADU Grant Program will provide up to $25,000 in assistance to reimburse homeowners for predevelopment costs necessary to build and occupy an ADU.

  • Accessory Dwelling Unit Grant Program: The objective of the ADU Grant Program is to create more housing units in California by providing a grant to reimburse homeowners for predevelopment costs.

  • HELOC: Home Equity Line of Credit can be taken out to add an ADU or take on other projects around the home. With a HELOC you're borrowing against the available equity in your home and the house is used as collateral for the line of credit. As you repay your outstanding balance, the amount of available credit is replenished – much like a credit card.

  • Cash-Out Refinance: Cash-out refinance gives you a lump sum when you close your refinance loan. The loan proceeds are first used to pay off your existing mortgage(s), including closing costs and any prepaid items – any remaining funds are yours to use as you wish.

  • Construction Loan: Construction loans are short-term loans, usually designed to be used over the course of only one year. In some cases, lenders choose to pay the loan amount directly to the construction company undertaking the project, rather than giving the money to the borrower.

 

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What is Required for Building an ADU

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