ADU Financing in San Diego

Updated November 11, 2026

ADU financing in San Diego usually comes from your home's equity, a renovation mortgage, or a local program. Published price ranges are in our ADU cost guide. This guide covers the main options and what we found on each program's own page. It is general information, not financial advice, so talk with a lender about your situation.

San Diego Housing Commission ADU Finance Program

The San Diego Housing Commission (SDHC) runs an ADU Finance Program for homeowners with low income in the City of San Diego [1]. Here is what its page lists [1]:

Detail	Program terms
Who qualifies	Income up to 80% of San Diego's Area Median Income
Property	Owner-occupied detached single-family home in the City of San Diego
Credit	Minimum credit score of 680
Loan	Construction loan up to $250,000, 3% fixed
Loan-to-value	Maximum 75%
Fee	$2,500 application fee at construction loan closing
Rent rule	ADU rent must stay affordable for seven years, and you cannot rent to a family member during that time

The program also provides an ADU consultant at no cost to help with design, permits, and construction [1]. The construction loan must be repaid after construction, for example by refinancing or with a home equity loan or line of credit [1]. Contact SDHC to confirm current terms and openings.

Renovation mortgages

Some mortgages let you roll the cost of building an ADU into one loan.

Fannie Mae HomeStyle Renovation. Fannie Mae lists accessory dwelling units, such as in-law suites, as eligible projects [2]. The lender reviews your plans and contractor and orders an "as-completed" appraisal to set the loan amount. Funds go into an account and are paid out in draws as work is done [2]. Fannie Mae says these rates may be lower than HELOCs and personal loans [2].
Freddie Mac CHOICERenovation. Freddie Mac says borrowers who are buying or refinancing can use CHOICERenovation to add a new ADU or renovate an existing one [3]. Freddie Mac also says rental income from an ADU can count as qualifying income if certain requirements are met [3].

Both are offered through approved lenders, not directly by Fannie Mae or Freddie Mac. The ADU must be legally allowed where you live [3], which means getting it permitted.

Home equity and refinancing

Many homeowners use a home equity loan, a home equity line of credit (HELOC), or a cash-out refinance of their first mortgage. SDHC's own program points to these options for paying off its construction loan [1]. Which one fits depends on your current rate, your equity, and how long the build will take, so compare offers from more than one lender.

The CalHFA ADU grant is closed

You may see older articles about a California ADU grant from CalHFA. CalHFA's page says the latest round of ADU funding was fully allocated as of December 28, 2023, and no new round is listed [4]. CalHFA also warns that anyone offering to help you get an ADU grant is running a scam [4].

Before you borrow

Get a full, installed, permitted price. Prefab sticker prices often leave out site work. See our prefab ADU guide and ADU cost guide.
Ask lenders how they handle draws and inspections during construction.
If you plan to rent the ADU, ask whether projected rent can help you qualify [3].
Keep the permit and final inspection records. Lenders may ask for proof the unit is legal [3].

FAQ

Can rental income from an ADU help me qualify for a loan?

It can with some loans. Freddie Mac says ADU rental income can be used as qualifying income if certain requirements are met [3]. Lenders apply their own rules, so ask each lender how they count ADU rent before you apply.

Is there a grant for building an ADU in San Diego?

The state CalHFA ADU grant is not open. Its funding was fully allocated as of December 28, 2023 [4]. SDHC offers a below-market construction loan, not a grant, for homeowners with low income in the City of San Diego [1].

Request a quote so you have a real price before you talk to lenders.

We're a referral service, not a contractor, and independent contractors may pay us for referrals.

Sources

San Diego Housing Commission, "Accessory Dwelling Units (ADU)," no date shown. Fetched 2026-11-11. https://www.sdhc.org/housing-opportunities/adu/
Fannie Mae, "HomeStyle Renovation," no date shown. Fetched 2026-11-11. https://singlefamily.fanniemae.com/originating-underwriting/mortgage-products/homestyle-renovation
Freddie Mac, "Accessory Dwelling Units," 2026. Fetched 2026-11-11. https://sf.freddiemac.com/working-with-us/accessory-dwelling-units
CalHFA, "ADU Grant Program," status notice dated December 28, 2023. Fetched 2026-11-11. https://www.calhfa.ca.gov/adu/