ADU grants in California

An ADU (accessory dwelling unit) is a small extra home on your land, such as a backyard cottage or a garage turned into a home. California's state ADU grant is the best known, and all of its money has been handed out.

State ADU grant from CalHFA: Up to $40,000
What it paid for: Costs before building starts
Can you still apply?: No, the money is used up
San Diego ADU loan: Up to $250,000

Building outside California? Vermont and New York have state ADU programs (see both). In other states, ask the housing office for your city or county about local ADU help, and use our state directory to see what your state housing agency offers.

The CalHFA ADU grant

CalHFA (the California Housing Finance Agency) is the state's home loan agency. Its grant covered up to $40,000 of the costs that come before building starts, paid back to the homeowner. These included permits, soil tests, getting the ground ready, the architect's drawings and the city's fees for a new home. It also covered an energy report (an estimate of the design's energy use) and a property survey, which shows exactly where your land stops. The one-time fees for setting up a loan were covered too.

On December 28, 2023, CalHFA said the money for the latest round of ADU grants was all gone. CalHFA adds a warning: if someone offers to help you get the ADU grant, it's a scam. Watch the CalHFA ADU page for news of any new round.

A small backyard cottage behind a California house

ADU loans still on California's list

Since the state grant ran out, California's remaining ADU money is mostly local loans. With a construction loan, you borrow for the building work and pay it back afterward. If you follow a forgivable loan's rules, you never have to pay it back. Only two programs on the state housing department's list say how much they lend.

Program	Type	Amount	Terms	Who it's for
San Diego Housing Commission ADU Finance Program. The agency says it is taking applications.	Construction loan	Up to $250,000	A fixed interest rate of 3%. The loan can be as much as 75% of your home's value. Once the ADU is built, you pay it back, most often by refinancing (taking out a new home loan) or with a home equity loan, which is a loan against the value of your home. For 7 years, the ADU's rent can't be more than the program allows. A free ADU adviser helps you along the way.	Homeowners who live in their own home in the City of San Diego. Your household can earn up to 80% of your area's middle income (see the dollar limit for your county), and your credit score must be at least 680. Your credit score is a number that shows lenders how reliably you have paid back money you owed.
Santa Cruz County ADU Forgivable Loan Program. The state housing department still lists this loan, but the county's own ADU page no longer mentions it. Before counting on it, check with the county planning office that it is still open.	Forgivable loan	Up to $40,000. Not confirmed by the county	The loan is forgiven if you let a low-income household rent the ADU, at a rent fixed by the county, for as long as the county requires (no more than 20 years). If you might sell, or stop renting it on these terms, ask the county what happens then.	Santa Cruz County homeowners

More help with ADUs from local governments

San Mateo County One Stop Shop: no-cost help with ADU design and permits, plus help managing the build
City of San Jose ADU Program: help with building, plus ADU designs the city has pre-approved
City of Chico ADU Program: help with building, plus approved ADU designs you can use
Monterey Bay My House My Home: lower-cost ADUs for older homeowners with low incomes, built with Habitat for Humanity, a home-building charity
City of Clovis ADU Finance Program: money you borrow to build or fix up an ADU on a Clovis property that has just one house

State and federal money that local programs pay out

CalHome: state money that nonprofit community groups and local governments use to help people buy a home with an ADU, or build or repair one
Local Housing Trust Fund Program: state money paid into local housing funds, which may help pay to build or repair an ADU, or to turn an existing space into one
Community Development Block Grant: a federal grant that cities and counties may use for ADU repairs and planning, aimed at households on low or middle incomes

These facts come from the state housing department's ADU funding facts and from each program's pages.

ADU help in other states

Vermont and New York each put state money into new ADUs. Both expect the ADU to stay someone's home for years, not become a vacation rental.

Program	Type	Amount	Terms	Who it's for
Vermont Housing Improvement Program (VHIP 2.0). Vermont Department of Housing and Community Development	Forgivable loan	Up to $50,000 per ADU	After 5 or 10 years, depending on the option you pick, the loan is forgiven and you owe nothing. During those years, the rent can't be more than HUD's Fair Market Rent, a rent limit the US housing department sets for your area. You pay 20% of the amount yourself, in cash or in work and materials. For the full $50,000, your share is $10,000.	People who own the property, live there and build a new ADU
Plus One ADU Program. New York State Homes and Community Renewal, through local partners	Local program help	Set by each local program	A team from your local government and a nonprofit community group manages the design, permits and building. You sign an agreement to keep the ADU as someone's long-term home for at least 10 years.	Homeowners with low or middle incomes who live in a house built for one family

Next steps

Already own your home? Start with your city or county's ADU program, or call your city's permit office.

Buying a home that has an ADU, or planning to add one? State help for first-time buyers can apply, as long as the home and the price fit the program's rules. Look at the California first-time home buyer programs, or check your state's options. One loan can pay for both the home and the building work: the FHA 203(k) loan. The Federal Housing Administration (FHA), a US government agency, backs this home loan, and the building costs are added to it.