Are you interested in constructing an Accessory Dwelling Unit? We believe it's a great idea, so we shall help you understand the ADU Grant Program and navigate the numerous rules, regulations, and procedure standards that regulate the development of these modest, innovative affordable housing units.
ADU Grant Program
The Accessory Dwelling Unit (ADU) Grant Program's aims to increase the number of housing units in California by offering a grant to reimburse homeowners for pre-development costs involved with the construction of the ADU.
The ADU Grant reimburses up to $40,000 in pre-development and non-recurring closing expenditures associated with the ADU's construction. Site preparation, architectural designs, permits, soil testing, impact fees, property surveys, and energy reports are all part of the development expenditures.
What are Additional Dwelling Units (ADUs)?
An ADU is a small dwelling unit with its own bathroom and kitchen that is built on the same property as a primary residence. Typically, these units are rented to tenants. They are also known as mother-in-law apartments, in-law suites, guest houses, or granny flats. Units in attics, basements, rear additions, and backyard constructions are examples of these areas (coach houses). These flats are designed to house a single-family. ADUs can be built on sites that already have legal dwelling units.
The Chicago ordinance distinguishes between coach houses, which are new units built in detached backyard buildings, and conversion units, which are new units built in an existing major residential building, typically in attic or basement spaces that are at least 20 years old.
ADU Ordinances & Requirements
The first step to building an ADU (also known as granny flats and in-law units) is determining whether your property qualifies. Until now, California ADU laws, which were enacted in 2017, may have been difficult for most homeowners to understand. With California, accessory dwelling units, permitted heights, parking space constraints, and other issues being so erratic, determining whether you could build an ADU was extremely difficult.
Fortunately, AB 68, a new California second home law that goes into effect in January, simplifies many of the concerns and sets a much more standardised set of rules. Based on the different Los Angeles ADU rules issued over the previous three years, here's what you should remember in mind when planning to build an ADU.
Property Lines and Setback
This is a significant issue under the City of Los Angeles ADU regulation, as homes are frequently clustered together. There are numerous types of ADUs, with the main difference being that some are attached to or inside an existing building, while others are stand-alone units.
In both circumstances, there must be at least four feet of a setback on your property, which means there must be at least four feet of space between the unit's border and the property line. That's a big aspect, especially for unattached independent apartments, and it's the first major obstacle for homeowners.
The only exception is if you're converting an old garage or other structure or building from the ground up in the same footprint. California's garage conversion laws make it simple to construct an ADU!
It should also be noted that a detached ADU cannot be sold separately from the main house. Of course, you can rent it out.
Eligible Lenders/ Loan Origination/ Servicing
• CalHFA approved lenders who have signed the ADU Lender Participation Agreement
• Lenders can price and deliver their construction loans using their delivery options
• CalHFA will not buy construction loans, reimburse lenders for construction loans, or provide any kind of guarantee for lenders who have made construction loans to eligible borrowers
• Lenders have the option of keeping servicing or releasing service to a third party of their choosing.
Since CalHFA is not a direct lender, our mortgage products are supplied through private loan officers who have been vetted and educated by CalHFA because we are not a direct lender. These loan officers can assist you in learning more about CalHFA's programmes and navigating the ADU loan and grant applications.
Contact one of the following CalHFA ADU Grant Program Lenders:
What documents should I have on hand when contacting a loan officer?
When you first contact a loan officer, you may need to have the following list of papers and information on hand to assist you with answers to your questions:
What to Include in the Submission Package?
• Closing Disclosure
• Itemization list for pre-development expenditures
• Construction loan deed of trust copy
• Construction loan approval paperwork
• Escrow instructions to wire money
(Architectural designs, permits, soil testing, impact fees, property surveys, energy studies, and utility hookups are all examples of pre-development expenditures.)
CalHFA will assess the submission package and make a direct contribution to construction escrow of up to $40,000. These funds can be utilised to compensate borrowers for qualified pre-development and non-recurring closing expenditures associated with the construction of an ADU.
CalHFA loan servicing will send the borrower a Form 1099-G for the calendar year in which CalHFA made an escrow contribution.
CalHFA 's Adu Grant Application Process
A homeowner applies for a building loan with a lender that has been accepted.
• Predevelopment expenditures are wrapped into the construction financing, requiring the homeowner to pay no or very little money upfront.
• CalHFA ADU grant application forms are filled out by the homeowner.
2) Approval of a Loan
• Homeowner is pre qualified for the CaIHFA ADU grant when the lender authorises the construction loan
• Lender delivers ADU Grant application NO package to CaIHFA, including a list of predevelopment expenditures and invoices, which is paid through the construction loan account.
4) Disbursement of a Grant
CaIHFA authorises the grant and deposits the monies to the loan account. • The homeowner's ADU construction loan principal is reduced.
The ADU can be built with the help of a construction loan.