Can You Get a $40,000 Grant for Your California ADU Project?

At Revival Homes, we’re frequently asked about city and state government programs that assist California homeowners with financing an ADU project. Special grants and lending programs do exist, but the details of these programs are often fast-changing. 

If you’re looking for more information, here’s what you need to know:

What’s the CalHFA ADU Grant Program?

The California Housing Finance Agency (CalHFA) is an agency of the state government that provides low-cost home financing to first-time and lower-income homeowners. In 2022, the state passed a budget that included $100 million in grants to help homeowners finance ADU construction. 

CalHFA created the ADU Grant Program to pay out the grant money to eligible homeowners. The grant provided up to $40,000 per homeowner to help offset some of the costs of the typical ADU project. Since the $40,000 is a grant, not a loan, homeowners never had to pay it back.

Is the CalHFA ADU Grant Program still active?

As of late 2023, the CalHFA ADU Grant funding was fully allocated, which means that this grant is not currently available. However, Revival Homes closely tracks the program, and if additional funds are provided to the program in the future, our customers will be the first to know.

What other ADU grant or loan programs exist?

Cities and localities across California offer special ADU grant or loan programs, and they sometimes include technical assistance with the ADU process. For example: 

• The San Diego Housing Commission offers an ADU Finance Program (more info here), which helps homeowners with moderate income in the City of San Diego build ADUs on their property. The program provides up to $250,000 in financing, plus project planning assistance. 
• The Orange County Housing Finance Trust will soon launch an Affordable ADU Loan Program (more info here). Homeowners who are willing to rent their ADU to a low-income tenant will be eligible for a discounted capital loan.
• The City of Pasadena offers a Second Unit ADU Program (more info here) that provides local homeowners with financial assistance as well as project planning support.
• The City of El Monte’s ADU Loan Program (more info here) provides up to a $75,000 loan to eligible homeowners for new construction, rehabilitation and/or legalization of an ADU.

To learn more about these programs and whether you may qualify, you can schedule a free consultation with a Revival Homes ADU expert here.

Who was eligible for the CalHFA ADU Grant?

Homeowners who qualify as having a low or moderate income were eligible for the CalHFA ADU Grant. The definition was quite generous: in Los Angeles County, a homeowner may earn up to $180,000 per year and be eligible, and in Orange County, a homeowner may earn up to $235,000 per year.

Here’s a full list of the maximum allowable income in each county:

Additionally, grant recipients had to be living in the home (and sign an affidavit certifying that they occupy the property), and continue living there during construction. Both single-family and multifamily homes (like a duplex) qualified. 

Investment properties and homes that are owned by an LLC weren’t eligible. After the ADU is completed, it can be used for any purpose except for short-term rentals or Airbnb.

What could CalHFA ADU Grant money be used for?

Grant recipients were allowed to use the grant money to pay for pre-development (“soft”) costs. This can include site prep, a survey of the property, architectural designs, soil tests, structural engineering and energy reports, and permitting fees. If a grant receipt took out a loan to finance the ADU, the recipient was also allowed to use the grant money to reduce the interest rate on your loan (also called “buying down points”).

Grant recipients were not allowed to use the grant money to pay for the “hard” costs of construction — essentially, building materials and labor.

How Revival Homes can help you

If you want to learn more about ADU grant programs, or want to discuss your project with a Revival Homes ADU expert, please book a free consultation!