ADU Financing Options in San Diego: Loans, Grants, and Local Programs

Building an Accessory Dwelling Unit (ADU) in San Diego is one of the smartest ways to increase your property’s value, create rental income, or add flexible space for family. But before your ADU can become reality, you’ll need to plan how to finance it.

At ADU Geeks, we guide homeowners through every step of the process—from feasibility to design, permitting, and construction—and that includes helping you understand ADU financing options available locally and statewide.

1. ADU Construction Loans

A construction loan lets you finance the design and build of your ADU, typically rolling into a long-term mortgage once the project is complete. In San Diego, many homeowners use construction-to-perm loans through local banks or credit unions such as:

• San Diego County Credit Union (SDCCU)
• Union Bank ADU Loan Program
• First Citizens Bank Renovation Loans

These loans often cover both soft costs (design, permits, utilities) and hard costs (construction materials and labor). Because ADUs are now recognized as value-add improvements, many lenders factor in your property’s after-build value when determining borrowing limits.

2. Home Equity Loans and HELOCs

If you already have substantial equity in your property, a Home Equity Line of Credit (HELOC) or home-equity loan can be one of the fastest and lowest-cost ways to fund your ADU.

• HELOCs act as revolving credit with flexible draw periods.
• Home-equity loans provide a lump-sum amount with fixed monthly payments.

Because ADUs can quickly add value to your property—especially in high-demand neighborhoods like North Park, Clairemont, and Encinitas—many homeowners choose this route to leverage existing equity.

3. Cash-Out Refinancing

Refinancing your primary mortgage and cashing out some of your equity can offer lower rates compared with personal or construction loans. This option works best if:

• Current mortgage rates are favorable compared with your existing loan
• You plan to stay in your home long-term and want predictable payments

4. Local ADU Grant and Assistance Programs

San Diego County offers several grant and rebate programs designed to help homeowners offset ADU development costs:

• California Housing Finance Agency (CalHFA) ADU Grant Program
  Provides up to $40,000 for pre-development and soft costs such as site prep, design, permits, and impact fees.
  Note: As of 2025, this program is reopening with new funding allocations—ADU Geeks can help you determine eligibility and connect you with approved lenders.
• City of San Diego ADU Incentive Pilot Program
  Offers permit-fee reductions and expedited reviews for qualifying ADUs that support affordable housing goals.
• SDG&E Energy-Efficiency Rebates
  Incentives for energy-smart features like heat-pump water heaters, solar readiness, and all-electric construction—reducing long-term utility costs and improving sustainability.

5. Private and Alternative Financing

New financial products are emerging for homeowners who prefer flexibility:

• Shared-equity ADU programs, where investment partners help finance the build in exchange for future rental income or appreciation share.
• Private ADU lenders such as Nesterly Finance, Renofi, or Point, offering specialized loans for accessory units.

ADU Geeks maintains relationships with local lenders and financing specialists to match you with the right solution for your project size and goals.

6. How to Choose the Right Option

When comparing ADU loan programs, consider:

• Total project cost (including design, permits, utilities, and build)
• Loan-to-value ratio (LTV)
• Whether payments begin during construction
• Interest rate type (fixed vs. variable)
• Eligibility for local or state grants

Our Feasibility Study provides a detailed cost analysis and financing roadmap before you commit—so you know exactly what’s possible on your property.

7. Why Work with ADU Geeks

With over 2,500 units under our belt and deep experience across San Diego County, ADU Geeks simplifies every part of your journey—from planning and permitting to construction and utility coordination. Our local team understands city-specific codes, incentives, and lender programs to help homeowners build smarter, faster, and more affordably.

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