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Your Guide to ADU Financing Options in SoCal
Building an accessory dwelling unit (ADU) can be a smart way to add value to your property, create rental income, or provide housing for family. But one of the biggest questions homeowners face is how to pay for it.
The good news: California and many local governments offer financing programs to help cover ADU construction costs. Below, we’ve organized the most relevant statewide, county, and city programs, with a special focus on Riverside County and nearby areas. Each program includes an overview, benefits, requirements, application details, and a direct resource link so you can take the next step.
Statewide ADU Financing Programs
CalHFA ADU Grant Program
Program Overview: The California Housing Finance Agency (CalHFA) offers grants of up to $40,000 to reimburse pre-development and closing costs like architectural plans, permits, soil tests, surveys, and energy reports. Funds are distributed through participating lenders. The most recent round of funding was fully allocated in December 2023, but CalHFA may open future rounds.
Key Benefits:
Grant funds don’t need to be repaid.
Reduces upfront costs significantly.
Can be combined with ADU loan programs to buy down interest.
Requirements & Limitations:
Household income must fall within CalHFA limits (around 80% of AMI).
Homeowner must occupy the property.
Funding is limited to “soft costs,” not labor or building materials.
Currently paused until new funding is announced.
Application Process: Apply through an approved CalHFA lender. The lender verifies eligibility, documents expenses, and submits the application to CalHFA. Funds are wired into escrow once approved.
Learn more at CalHFA’s ADU Grant Program
CalHome Program
Program Overview: The CalHome Program provides funds to local governments and nonprofits to issue loans for ADU or JADU construction and rehabilitation. Loans can cover construction, permits, appraisals, engineering, and closing costs.
Key Benefits:
Low-interest or deferred payment loans.
Can be used for both hard and soft costs.
May also support first-time homebuyers and owner-occupied rehab projects.
Requirements & Limitations:
Rules vary by city or county administering the funds.
Minimum 30-day rental term (no short-term rentals).
Availability depends on annual allocations.
Application Process: Apply directly through your local housing agency or nonprofit administering CalHome funds.
Local & Regional Programs
City of El Cajon ADU Loan Program
Overview: El Cajon’s program offers loans up to $100,000 for detached ADU construction. Interest ranges from 0–5%, with no payments required for at least 5 years.
Benefits: Covers most construction costs, defers payments, and considers projected rental income.
Requirements: Must be a detached single-family home; income limits (≤150% AMI); credit score ≥640; LTV ≤75%. Homeowner must rent ADU at affordable rates for 5 years.
Application: Complete an eligibility screening and loan application. City reviews credit, property, and income before disbursing funds.
San Diego Housing Commission (SDHC) ADU Finance Program
Overview: The SDHC ADU Program provides loans up to $250,000 plus design and permitting assistance. Funding for FY2025 is paused, but limited FY2024 funds remain.
Benefits: Large loan amounts and professional project support.
Requirements: Owner-occupied home in San Diego; income ≤150% AMI; credit score ≥680; $2,500 fee. Must rent ADU to households ≤80% AMI for 7 years.
Application: Submit pre-qualification form, pay fee, and SDHC staff manage design, permits, and contractor selection.
NHS of Los Angeles County (NHS LA)
Overview: NHS LA County helps homeowners access the CalHFA $40k grant and may provide gap financing or second mortgages.
Benefits: Provides escrow management, vendor payment, and financing without requiring refinance.
Requirements: Must occupy property in LA County; eligible for CalHFA grant; properties may be 1–4 units.
Application: Submit property, income, and borrower documentation to NHS.
Link to NHS LA County ADU Grants
Laguna Niguel ADU Grants & Loans (Orange County)
The City of Laguna Niguel consolidates several options:
CalHFA ADU Grant
CalHome Program
CCEDA ADU Program (offers second mortgages)
HPP Cares (covers origination and escrow fees)
One Trust Home Loans (construction loans with grant access)
Pasadena Second Unit ADU Program
Overview: Pasadena’s program provides loans up to $225,000 at 1% interest, no payments for 3 years. Requires use of pre-approved plans and a 7-year rent covenant for voucher tenants.
El Monte ADU/JADU Loan Program
Overview: El Monte offers up to $75,000 for ADUs and $50,000 for JADUs at 3% interest, with forgiveness after 5 years if conditions are met.
San Gabriel Valley Habitat for Humanity (SGV Habitat)
Overview: SGV Habitat’s ADU Program offers 0% interest loans and subsidized funding for low-income homeowners who rent the ADU affordably. Habitat also manages design, permitting, and construction.
City of Riverside Housing Rehabilitation Program (Not ADU-Specific)
Overview: Riverside offers interest-free, deferred loans up to $60,000 for home rehabilitation. While not ADU-specific, it can free up other funds for ADU projects.
Closed/Discontinued Programs
Long Beach Backyard Builders Program – once offered $250k zero-interest loans, but applications are closed (Long Beach).
Orange County Housing Finance Trust Affordable ADU Program – discontinued May 2025 (OCHFT).
Comparison of Active SoCal ADU Financing Programs
| Program | Provider/Area | Eligibility Highlights | Loan/Grant Details | Resource Link |
|---|---|---|---|---|
| CalHFA ADU Grant | Statewide | ≤80% AMI, owner-occupant | Up to $40k grant for soft costs | CalHFA |
| CalHome Program | Local agencies | Varies by city/county | Low-interest/deferred loans | HCD |
| El Cajon ADU Loan | City of El Cajon | ≤150% AMI; credit ≥640 | Up to $100k, 0–5% interest | El Cajon |
| SDHC ADU Finance | San Diego | ≤150% AMI; credit ≥680 | Up to $250k + support | SDHC |
| NHS LA County | LA County | Eligible CalHFA households | Grant support + gap loans | NHS LA |
| Pasadena ADU Program | Pasadena | Voucher tenants; credit ≥650 | Up to $225k at 1% | Pasadena |
| El Monte ADU Program | El Monte | ≤120% AMI | Up to $75k/$50k, forgivable | El Monte |
| SGV Habitat ADU | SGV Habitat | Low-income homeowners | 0% interest + construction | SGV Habitat |
| Riverside Rehab Program | Riverside | ≤80% AMI | Up to $60k rehab loan | Riverside |
Key Takeaways for Homeowners
Combine programs – Many city loans work best when paired with the CalHFA $40k grant.
Expect affordability requirements – Most programs require you to rent the ADU at affordable rates for 5–7 years.
Plan for paperwork – Applications require proof of income, property ownership, and sometimes credit checks or inspections.
Check availability often – Programs open and close as funding is allocated.
Ready to Build Your ADU?
Financing an ADU doesn’t have to be overwhelming. With the right combination of grants, loans, and trusted construction support, you can make your project a reality.
At Honeywill Construction, we’ve been helping Riverside County homeowners bring their projects to life for over 25 years. Our team provides quality workmanship, clear communication, and timely completion — from design through construction.
Contact Honeywill Construction today to start your ADU project with a free consultation.
Helpful Resources for ADU Financing in Riverside County :
Looking to explore financing options for your ADU project? These resources can help you understand costs, compare loan options, and connect with approved lenders:
- CalHFA Accessory Dwelling Unit (ADU) Grant Program – Learn about California’s statewide grant program offering up to $40,000 in assistance for ADU pre-development costs.
ADU Financing FAQ
Southern California homeowners have several options:
State Grants & Loans: CalHFA $40K ADU Grant, CalHome Program (loans distributed through local governments).
City-Level Loans: Pasadena, El Monte, El Cajon, South El Monte, and San Diego Housing Commission (SDHC) all run ADU loan/grant programs.
Nonprofit Programs: San Gabriel Valley Habitat for Humanity offers 0% financing tied to affordability.
Regional Programs: SCAG PATH Program directs funding into Riverside County and other regions.
Traditional Lending: Home equity loans (HELOCS), cash-out refinancing, and renovation loans through banks and credit unions.
Riverside County homeowners can:
Use statewide options (CalHFA Grant, CalHome loans).
Access funding distributed through SCAG’s PATH Program.
Explore traditional financing: HELOCs, construction loans, or cash-out refinancing.
At present, the City of Riverside does not have its own ADU-specific loan program; residents rely on state/regional options and private lenders.
Yes. The CalHFA ADU Grant (up to $40,000) covers predevelopment and soft costs (permits, design, engineering). Some cities, like South El Monte, also offer direct grants ($25,000).
Provides up to $40,000 for predevelopment/closing costs.
Must work with a CalHFA-approved lender (e.g., OneTrust Home Loans, CCEDA).
Cannot be used for direct construction costs.
Funds are applied as credits during the loan closing process.
Yes — but they are regional/state-driven, not city-specific.
El Monte Program: 3% interest, deferred payments, partial forgiveness.
Pasadena: 1% simple interest.
El Cajon: 0–5%, deferred.
SDHC: up to $250,000 with affordability requirements.
In Riverside, homeowners typically access CalHome-funded loans or private low-interest HELOCs.
Yes. Many homeowners in Riverside County use HELOCs or cash-out refinancing if they have sufficient equity. Unlike grant/loan programs, these are not income-restricted but depend on credit score and equity.
CalHFA Grant: Borrower income must meet county-specific limits (Riverside County ~ $173,000 household income cap in 2025).
City Programs (Pasadena, El Monte, SDHC, South El Monte): Generally restricted to low- or moderate-income households (often 80–120% of Area Median Income).
Yes. Some lenders (including CalHFA-approved ones) allow projected ADU rental income to count toward debt-to-income ratios. This can help homeowners qualify for larger loans.
CalHFA lender programs typically require a minimum credit score of 660–680.
City-based deferred loan programs (El Monte, Pasadena, El Cajon) are more flexible but still review creditworthiness.
Private HELOCs usually require 680–700+.
Yes.
El Monte ADU/JADU Program forgives part of the loan if the homeowner remains compliant for 5 years.
Some local CalHome-funded loans offer partial forgiveness.
Habitat for Humanity’s 0% financing acts as a form of subsidy.
Yes — reopened in December 2023, still available in 2025, though funds are limited and distributed through partner lenders.
