California ADU Grant: How to Get $40,000 for Your ADU [2026 Update]
Is the California $40,000 ADU grant still available in 2026? Learn about CalHFA ADU grants, eligibility requirements, and how to apply.
One of the most common questions we hear from San Diego homeowners is: "What is the $40,000 grant in California for ADU?" Here's everything you need to know about ADU financing assistance in 2026.
The CalHFA ADU Grant Program
The California Housing Finance Agency (CalHFA) previously offered the ADU Grant Program providing up to $40,000 for pre-development costs. This included:
- Architectural and design fees
- Site preparation assessments
- Permit fees
- Impact fees
- Property surveys
- Energy reports and Title 24 compliance
Is the ADU Grant Still Available in 2026?
The CalHFA ADU Grant Program was extremely popular and funding was limited. As of 2026, the original program has exhausted its allocation. However, there are alternative programs and new initiatives to watch:
Current ADU Financing Options
- Local ADU Incentive Programs: San Diego has periodically offered fee waivers and expedited permitting
- CalHFA ADU Junior Loan: Low-interest loans for ADU construction
- Federal Housing Administration (FHA) Loans: FHA 203(k) renovation loans can include ADU costs
- Home Equity Lines of Credit (HELOC): Most common funding source
Who Was Eligible for the California ADU Grant?
For reference, the CalHFA program required:
- Property must be owner-occupied
- Household income at or below 80% of Area Median Income (AMI)
- Property located in California
- ADU must be used for rental housing (not short-term rentals)
- Homeowner must agree to rent affordability restrictions
How to Get Money to Build an ADU in California
Even without the grant program, there are multiple ways to finance your ADU:
1. Home Equity Line of Credit (HELOC)
The most popular option. Borrow against your home equity at competitive rates. Many San Diego homeowners have significant equity given property appreciation.
2. Cash-Out Refinance
Replace your existing mortgage with a larger one and use the difference for ADU construction. Works well if current rates are favorable.
3. Construction Loans
Short-term loans specifically for building projects. Converts to permanent financing after construction.
4. ADU-Specific Loan Products
Some lenders offer specialized ADU financing that considers projected rental income in qualification.
Tax Benefits of Building an ADU
Even without grants, ADUs offer significant financial advantages:
- Rental Income: $2,000-$4,000/month in San Diego
- Property Value Increase: Typically adds 20-30% to home value
- Depreciation Deductions: The rental portion can be depreciated
- Property Tax Reassessment: Only the ADU is reassessed, not the entire property
Next Steps
Contact One Stop Builders at (858) 567-0007 for a free consultation. We'll help you understand current financing options and provide a detailed cost estimate for your San Diego ADU project.