CalHFA Offering ADU Grants
The California Housing Finance Authority (CalHFA) is now running an ADU Special Financing Program to provide grants of up to $40,000 for qualified homeowner occupants with low or moderate incomes who wish to build an ADU (accessory dwelling unit). The grants can be used for pre-development costs such as site prep, architectural designs, permits, soil tests, impact fees, property survey, and energy reports. The grants can also be applied to non-reoccuring closing costs. ADUs can be backyard cottages, in-law units, finished basements, secondary units, or many other arrangements intended to serve as separate residences.
CalHFA is not a direct lender, so its mortgage products are available through approved private loan officers and non-profit consumer credit counseling agencies. HPP Cares is one of a number of non-profit consumer credit counseling agencies participating in the CalHFA ADU Special Financing Grant Program. HPP Cares offers three funding options.
One is to qualify for loan financing, such as a Home Equity Line of Credit (HELOC), second mortgage or cash-out refinance. For this option, all proceeds from the loan must be placed in a managed escrow account, after which the CalHFA ADU Grant will be added to the escrow account. All funds will be disbursed according to the completion of phases of the ADU, and no money goes directly to the homeowner.
The second option is for those who wish to pay for the ADU with cash from savings, a HELOC, cash out refinancing or a loan from family or friends. All funds must be placed in a managed escrow account to which the CalHFA ADU Grant funds will be added. All projects will be overseen by HUD Certified Inspectors.
The third option is to combine some cash and some financing. It is important to know that the CalHFA 40K ADU Grant Funding is taxable, so consumers are advised to consult with a tax adviser. Applications are currently closed for September, but they will open again during the first week of October and every month.
HPP Cares holds a Weekly Wednesday call for consumers interested in learning more about the program. Go here to find out more.