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Financing Basics

ADU Financing Options

United Build Partners does not provide financing. This is a plain-language overview of the paths homeowners commonly explore, so you know what questions to bring to a licensed lender.

Common ways homeowners finance an ADU

HELOC (Home Equity Line of Credit). Borrows against equity you've already built in your home, typically with a variable rate and flexible draw period — commonly used because it doesn't require refinancing your existing mortgage.
Cash-out refinance. Replaces your existing mortgage with a new, larger one and gives you the difference in cash — can make sense if current rates are favorable compared to your existing mortgage, and less sense if they aren't.
Renovation / construction loans. Loan products specifically structured around a construction project, sometimes underwritten in part against the home's projected value after the ADU is complete — ask a licensed lender which programs you'd qualify for.
State and local grant programs. Some California cities and state programs offer grants or forgivable loans for specific ADU categories (often income-qualified). Availability changes often — see our current status guide for California's ADU grant program, and confirm with a licensed lender or your city's housing department what's currently open.

What to consider

Questions worth asking a licensed lender

How much equity or income is required to qualify, and at what rate? Does the loan require payments to begin during construction, before the unit is generating any rent? Is the loan underwritten against your home's current value or its projected value after the ADU is built? Each financing path has different answers, and the right one depends on your specific financial picture — something only a licensed lender can properly evaluate. United Build Partners can help you understand your project scope and cost range, but financing decisions and qualification should always go through a licensed lender.

Want a rough number before that conversation? Our ADU loan payment calculator estimates a monthly payment from a loan amount, rate and term you choose.

Frequently asked questions

Many homeowners use a home equity line of credit to fund ADU construction, since it borrows against equity you already have. Availability and terms depend on your current equity, credit, and lender — a licensed lender can tell you what you actually qualify for.

Some lenders offer ADU-specific construction or renovation loan products, and California has run state-backed grant and low-interest loan programs for ADU construction from time to time. Program availability changes, so confirm current options with a lender rather than assuming a specific program is still active.

Some loan programs let a lender count a portion of the ADU's projected rental income toward your qualifying income, which can help homeowners who wouldn't otherwise qualify based on existing income alone. This varies by lender and loan type, so ask directly what a given program allows.

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