Ca Homeowners: Increase Wealth And Comfort With An Accessory Dwelling Unit

Recent state laws have made the creation of an Accessory Dwelling Unit (ADU) more straightforward than ever before. Homebridge is dedicated to helping California homeowners make the most of these changes with financing options that allow you to build an ADU on your own property.

Let’s first break down what an ADU is, along with its benefits, and then explore financing solutions for getting you started.


What Is An Accessory Dwelling Unit (ADU)?

Accessory Dwelling Units (ADUs), sometimes called a casita or in-law suite, are separate living areas on the same land as a detached house. They offer a fantastic way to create space while avoiding the purchase of a second home. Here are just a few additional benefits and possibilities of an ADU:

  1. Cost-effective construction that doesn’t require significant infrastructure, land payment or costly materials
  2. Additional income when you rent out your ADU*
  3. Living space for extended families that also maintains privacy


There are many different kinds of ADUs, but there are three popular types that you can consider.

DETACHED NEW CONSTRUCTION. Often referred to as DADUs, detached new constructions are freestanding structural forms that can serve as a multipurpose space for whatever you choose, including a home office, a backyard cottage or a guest house.

GARAGE CONVERSION. There are many uses for a garage conversion, from a media room to an entertainment space, but they all have one thing in common: making the existing space more useful to your current needs.

BASEMENT CONVERSION. Basement conversions are the most common type of ADUs and have proven to be one of the best ways to add value to your home. No matter the need, they usually provide the versatility needed to meet it.

[H2] how to FiNance the construction of your ADU


An ADU can be drastically less expensive than other solutions for an expanding household. By combining a Homebridge renovation loan with the California Housing Finance Agency ADU Grant program, you can offset some of their costs by up to $25,000!

ADU Grant Benefits include:

  • Up to $25,000 to cover pre-development soft costs; the amount of the grant will be the lesser of $25,000 or the actual soft costs associated with building the ADU
  • Never needs to be repaid
  • Available through Homebridge, a CalHFA ADU-approved lender

Qualifications include:

  • Low income OR
  • Moderate income and low equity OR
  • Moderate income and located in a distressed economic area
  • Income may not exceed 80% of the Area Median Income (AMI) or CalFHA’s limits


Homebridge offers a variety of renovation products that allow California homeowners to finance and create an ADU with one home loan. One option is the FHA 203(k) loan program. A noteworthy benefit of an FHA 203(k) loan is that its requirements are flexible in terms of creditworthiness. That’s because The FHA program was established to help borrowers with less-than-perfect credit.

Another renovation loan option is the Fannie Mae HomeStyle® program. This program offers renovation funds that can reach represent up to 50 percent of the property’s value after renovations are completed.

Choosing the right program depends on your needs and how you want to approach the construction of your ADU. The first place to start is with your Mortgage Loan Originator. Together, you can discuss your goals and arrive at a financing solution that will help you create the ADU you want.


*Based upon the mortgage loan program used, using rental income from an accessory unit for qualifying purposes may not be allowed.

HomeStyle® is a registered trademark of Fannie Mae.

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