Paying for your build

Financing your ADU

Most ADU builds in the Sacramento area cost between $80,000 and $300,000. Here are the most common ways our clients pay for them, plus what's worth knowing before you pick one.

CalHFA ADU GrantCurrently paused

The California Housing Finance Agency offered a $40,000 grant to help cover pre-development costs like design, permits, and site work. The program ran out of funds and is paused right now. The state has talked about bringing it back, so it's worth checking the CalHFA website now and then. We'll also let you know if it reopens while we're working with you.

Home Equity Line of Credit (HELOC)Most popular

A HELOC is the most common way our clients pay for an ADU. It works like a credit card tied to the equity in your home, so you only borrow what you need, when you need it. Your main mortgage stays the same, which matters if you locked in a low rate years ago. Rates are variable, so your payment can move up or down over time.

Home Equity LoanFixed payments

A home equity loan gives you the full amount up front as a lump sum, with a fixed rate and fixed monthly payment. This works well if you already know your final build cost and want predictable payments. Like a HELOC, it sits on top of your main mortgage and doesn't change your first loan.

Cash-Out RefinanceRun the numbers first

A cash-out refinance replaces your current mortgage with a new, larger one and gives you the difference in cash. This can make sense if today's rates are close to or below your current rate. If you're sitting on a low rate from a few years ago, refinancing usually costs more in the long run. A HELOC is often the better fit.

Construction LoanNew builds

A construction loan pays out in stages as your ADU is built. Most lenders require a licensed general contractor to manage the project, which is us (CA CSL #993478). After the build, the loan often converts into a regular mortgage. This is a common path for larger detached ADUs.

ADU-Specific Lenders (RenoFi and others)Newer option

A few newer lenders, like RenoFi, are built just for home improvement and ADU projects. They look at what your home will be worth after the ADU is finished, which can let you borrow more than a standard HELOC. Terms and rates vary, so it's worth comparing a few quotes.