With San Diego’s ongoing housing shortage, building an Accessory Dwelling Unit (ADU) on your property is not just a smart investment—it’s also a solution that the city and state are actively encouraging. From state-level incentives to local funding programs, there are several grants and financing options available to help homeowners offset the costs of building an ADU.
In this guide, you’ll learn exactly how to find and qualify for grants and other financial aid for your San Diego ADU project in 2025.
What Is an ADU and Why Build One?
An Accessory Dwelling Unit (ADU) is a secondary housing unit built on the same lot as a primary residence. These can be detached guest houses, converted garages, or basement apartments.
Benefits of Building an ADU:
- Generate rental income
- Increase property value
- Create housing for family or caregivers
- Support affordable housing initiatives
1. California Housing Finance Agency (CalHFA) ADU Grant Program
The CalHFA ADU Grant Program is one of the most robust funding opportunities in California. As of 2025, eligible homeowners can receive up to $40,000 in grant funds to cover pre-development costs like:
- Site prep and engineering
- Permitting fees
- Impact fees
- Architectural plans
Who Qualifies?
- Property must be a single-family, owner-occupied residence
- Income must fall below the CalHFA income limits
- ADU must be used for long-term housing (not short-term rentals)
Application Process:
Apply through a CalHFA-approved lender. You’ll need a construction loan or renovation loan in place to bundle with the grant.
2. San Diego Housing Commission (SDHC) ADU Incentive Pilot Program
The San Diego Housing Commission launched an ADU financing and technical assistance program to help moderate-income homeowners.
Key Features:
- Forgivable loans for ADU construction
- Pre-approved designs and permitting support
- Technical assistance with navigating city processes
While funding varies year to year, SDHC offers programs targeted at expanding affordable rental housing. Check their official ADU support page for the most current options.
3. Local and Utility Rebates
San Diego Gas & Electric (SDG&E) Energy-Efficiency Rebates
If you’re installing energy-efficient appliances or building a net-zero ADU, SDG&E offers rebates and incentives for:
- HVAC systems
- Insulation upgrades
- Solar installations
San Diego County Permitting Fee Waivers
The county occasionally waives or reduces impact and permitting fees for ADU construction—especially in unincorporated or rural areas. Monitor updates via the County of San Diego Planning & Development Services site.
4. Fannie Mae’s HomeStyle Renovation Loan
If you don’t qualify for a grant, consider this low-interest renovation loan. It allows you to borrow against the future appraised value of your property post-ADU construction.
- Roll ADU costs into a single mortgage
- Use with the CalHFA grant for pre-development costs
- Available through most major lenders
More info: Fannie Mae’s HomeStyle Program
5. Nonprofit and Community-Based Programs
Organizations like Habitat for Humanity San Diego and Local Initiatives Support Corporation (LISC) occasionally offer funding, design support, or project partnerships to promote ADUs as affordable housing.
Reach out directly to inquire about open application periods or upcoming ADU-related initiatives.
How to Prepare for a Successful ADU Grant Application
Before applying for any grants or programs:
- Check Your Eligibility: Income, property type, and project scope all matter.
- Get Pre-Qualified Financing: Many grants require you to have financing secured.
- Gather Documents: Be ready with title deeds, income verification, construction estimates, and design plans.
- Use City Resources: San Diego offers a one-stop ADU guide for zoning, permit requirements, and process steps.
Visual Breakdown: Key ADU Grant Programs in San Diego (2025)
| Program | Grant Amount | Eligibility | Best For |
|---|---|---|---|
| CalHFA ADU Grant | Up to $40,000 | Low-to-moderate income, owner-occupied homes | Pre-development costs |
| SDHC Incentive Program | Varies | San Diego residents | Forgivable construction loans |
| SDG&E Rebates | Varies | Energy-efficient projects | Appliance, solar, HVAC upgrades |
| Fannie Mae HomeStyle | Based on home value | Most homeowners with equity | Full construction funding |
| Habitat for Humanity / LISC | Varies | Community-focused or income-eligible homeowners | Affordable housing initiatives |
Final Thoughts
Building an ADU in San Diego doesn’t have to break the bank. Between CalHFA grants, SDHC incentives, utility rebates, and creative financing options, there are real ways to cut down on your costs—especially if your project aligns with California’s affordable housing goals.
Stay informed, act quickly (as funding windows close fast), and work with a professional to ensure your plans qualify for all available aid.