New ADU funding laws effective January 1, 2021

If you want to create an ADU but you don’t have enough finance for that please check below the California state law about ADU funding.

The California Health and Safety Code (HSC), Section 65583(c)(7), requires that cities and counties develop a plan that incentivizes and promotes the creation of ADUs that can be offered at affordable rent for very-low to moderate-income households.
As recapped below, HCD has developed a list of existing state grants and financial incentives in connection with the expenses for the planning, construction and operation of an ADU with affordable rent for very low to moderate-income households.
- Potential State Grants and Financial Incentives for ADUs
  - CalHome Program – State funds to local public agencies and nonprofit corporations for first-time homebuyer mortgage assistance including a home purchase with an ADU or JADU; owner-occupied rehabilitation assistance including rehabilitation of ADUs or JADUs; ADU/JADU assistance including construction, repair, and reconstruction; and homeownership development project loans including predevelopment and carrying costs during construction related to ADUs and JADUs (HCD CalHome program)
  - Local Early Action Planning (LEAP) Grants – State grants to local jurisdictions including eligible partnerships for housing planning, and developing or improving an ADU ordinance in compliance with Section 65852.2 of the Government Code (HCD LEAP program)
  - Local Housing Trust Fund (LHTF) Program – Matching funds to local and regional housing trust funds. Funds may also be used for the construction, conversion, repair, reconstruction or rehabilitation of ADUs or JADUs (HCD LHTF program)
  - Regional Early Action Planning (REAP) Grants – Grants to council of governments (COGs) and other regional entities for activities relating to housing planning and activities including establishing Prohousing Policies such as adopting ADU ordinances or other mechanisms that reduce barriers for property owners to create ADUs (HCD REAP program)
  - SB 2 Planning Grants – Grants to local governments including eligible partnerships for housing planning and to encourage ADUs and other innovative building types through ordinances, outreach, fee waivers, pre-approved plans, website zoning clearance assistance, and other homeowner tools or finance tools (HCD SB2 program)
  - Community Development Block Grant Program (CDBG) – Federal funds allocated to non-entitlement jurisdictions, and non-entitlement jurisdictions that partner with non-federally recognized Native American communities for community development activities including single- and multi-family rehabilitation and potential local ADU rehabilitation and planning programs. Applicants must be income qualified in low- to moderate-income households for rehabilitation and areas for planning. Contact your local jurisdictions for more information.
- Other Potential Grants and Financial Incentives for ADUs
  - City of Clovis: ADU Finance Program – Provides financing to eligible property owners seeking funding to build or repair ADUs on their existing single-family lot in the City of Clovis.
  - Santa Cruz County: ADU Forgivable Loan Program – Offers forgivable loans up to $40,000 to homeowners who rent ADUs to low-income households at affordable rents for up to 20 years.
  - San Mateo County: One Stop Shop Program – Provides no-cost support from Hello Housing with the design, permitting, and project management involved with building an ADU.
  - Monterey Bay: My House My Home Program – Creates affordable ADUs for low-income senior homeowners in the Monterey Bay area.
  - City of San Jose: Accessory Dwelling Unit Program – Provides pre-approved ADU plans and support for ADU construction.
  - City of Chico ADU Program – Provides pre-approved ADU plans and support for ADU construction.
  - Housing Trust Silicon Valley – Provides funding to support homeownership, rental housing, development financing, and offers programs for homeowners.