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How To Get a $40K Grant To Build Your California ADU!
If you want to add an ADU to your property, listen up! California’s ADU Grant Program is providing you with up to $40K to build one. Be ready to start building!
The shortage of affordable housing in California is at an all time high which is why the government is actively seeking solutions to solve this problem with programs to make building Accessory Dwelling Units more affordable.
By: Johanna Lizalde
In September 2021, Governor Gavin Newsom signed legislation to boost affordable housing supply and strengthen accountability measures and approved the state’s $22 billion investment in a broad range of housing types including Accessory Dwelling Units (ADUs).
That year, the California Housing Finance Agency (CalHFA) created the ADU Grant Program with the goal to increase the number of housing units in California by offering this grant to reimburse homeowners for pre-development costs involved with the construction of each ADU.
In 2023, this grant will offer a total of $25 million to fund 600 ADUs to reimburse up to $40K per project in pre-development and non-recurring closing costs associated with ADU’s construction. What are the pre-construction costs? Some include site preparation, architectural designs, permits, soil testing, impact fees, property surveys, and energy reports.
What is an Accessory Dwelling Unit?
Accessory Dwelling Units (ADUs) are commonly known as granny flats, in-law suites, cottages, secondary units, and more.
An Accessory Dwelling Unit is a completely independent living space for one or more people to use as a secondary housing unit on a single-family residential lot. They are extremely popular for their affordability and flexibility because homeowners can benefit from them in many different ways:
- Increases Home Value: Adding an accessory dwelling unit could increase your property’s value. ADUs not only provide extra space but also are an investment opportunity for you and your family’s future.
- Extra Monthly Income: Building an ADU can provide you with an extra source of income. How? Since the space is fully functional, you can rent it out! This is perfect for the people who are looking for a passive income, or homeowners who have retired. Read more on ADU rental income.
- Extra Space: If you are looking for an extra living space, an ADU is a perfect solution for this. They can be used as a private office space, guest room, studio, or even a playroom for bigger families.
California’s ADU Grant Program in 2023
“Many homeowners have the land available in their backyard, and we want to make it as easy as possible for them with this grant program”
CalHFA Executive Director Tiena Johnson Hall.
Who is Eligible?
There are 58 different counties across California that each have income limits a homeowner must not exceed to qualify for the grant.The numbers range depending on the county the homeowner lives in. Also, there is a brief list of specifications that must be considered before applying for this grant:
- The property must be owner-occupied.
- This grant applies only to homeowners who are interested in a “renovation-type” loan to fund their ADU.
Download the ADU Grant Qualification Guide and find out if you're elegible!
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Is it a grant or a loan?
It’s A GRANT! So there’s no lien and it doesn’t have to be paid back! However, to get the grant, homeowners need to get a renovation loan from one of the pre-approved lenders.
How homeowners can finance an ADU?
There are many financing options to choose from and many homeowners could feel overwhelmed by this. If you are exploring different financing options, check out this article where the different types of loans are explained.
If you choose to apply for the ADU Grant Program, you will review the specific loan options with one of CalHFA’s approved lenders in order to get approved to receive the grant funds.
If you want to start finding the best loan option to finance your project, book a free consultation with one of our ADU experts here.
What documents should I have on hand?
When first contacting a loan officer, you may want to have the following list of papers and information on hand to assist you with answering questions:
- Pay stubs
- Bank statements
- Employment history
- Previous tax returns
How to Apply for the ADU Grant Program?
It’s really simple applying for this grant, but we know it can be tricky so here’s a step-by-step of how the process would be like!
- Project Consultation: Book a FREE consultation with one of our ADU experts for guidance to start applying for this grant.
- Application & Financial Report: We gather the necessary information to run a financial report and pre-qualify you for your grant funds!
- Loan Approval: Receive the grant amount included in the renovation loan to fund your project!
- Project Development Plan: It includes site evaluation, 2D plans, 3D designs, a detailed scope of work, finishes, and a project estimate!
- Grant Disbursement: The funds are wired to your loan account. This lowers the ADU construction loan principal that the homeowner has to repay.
- Construction of the ADU: With the help of the Project Development Plan, our in-house construction team will build your ADU accurate to your vision.
If you think building an ADU is the next step and something you could now afford with the ADU Grant Program, contact us today to start guiding you towards that dream with the tools that make it possible. Our ADU experts will be happy to assist you in building your ADU from start to finish.
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