ADU Finance Program
NOTE: Funds are not available for this program in Fiscal Year 2025 (July 1, 2024 – June 30, 2025).
The San Diego Housing Commission’s (SDHC) Accessory Dwelling Unit (ADU) Finance Program helps homeowners with moderate income in the City of San Diego build ADUs on their property. The program provides financial assistance in the form of construction-to-permanent loans (up to $250,000) and technical assistance at no cost that helps homeowners understand and complete the process of building an ADU. Participating homeowners may generate wealth for themselves through the increase in their property’s value and the rental income from their ADU. In addition, the program helps create affordable rental housing in the City of San Diego because the rents for the ADUs built with help from the program are required to remain affordable for seven years.
For more information, contact adu@sdhc.org.
Eligible Households
- Income up to $236,600 (150% of San Diego’s Area Median Income [AMI])
- Residential property (detached single-family residence) in the City of San Diego
- Main home must be owner-occupied
- Minimum Credit Score of 680
- Application Fee of $2,500 due after SDHC approval at construction loan closing
Technical Assistance (Help with the Process)
- ADU Consultant provided by SDHC to help with pre-design, permits, and construction
- Vendor selection tips
- Project management support
- Potential landlord-tenant training and help with leasing
Construction Loan Details
The SDHC construction loan funds the construction of one ADU per property. The SDHC construction loan is then refinanced into a permanent first mortgage with SDHC or homeowners may refinance with a lender they choose.
- Maximum loan amount: $250,000 (subject to SDHC and first mortgage lender underwriting)
- Interest rate: 1% Fixed
- Maximum 75% Loan-to-Value ratio
Permanent Loan Details
- Maximum loan amount: $250,000 (subject to SDHC underwriting and approval)
- Interest rate: 4% Fixed, with amortizing monthly payments
- Term: 15 years, 30 years due in 15 years
- Maximum 75% Loan-to-Value ratio
- SDHC Permanent Loan must be in first or second lien position
Affordability Restrictions on ADU
- The rent for the ADU must remain affordable for seven years for tenants with income up to 80% of AMI. The property owner cannot rent to a family member during this seven-year period.
- “Affordable” means 30% or less of the renter’s monthly household income
- AMI and Rent charts are updated annually
ADU Development Pilot Program
To help San Diego homeowners understand the process related to ADU construction, the San Diego Housing Commission (SDHC) built ADUs in the available yard space at five single-family homes SDHC owns and rents as affordable housing in the City of San Diego.
Through this process, SDHC documented “lessons learned” with regard to site feasibility, design, construction, cost, timeline, oversight needed, and other development-related aspects that may arise with the development of ADUs.
Lessons Learned and Key Takeaways for Homeowners
- Read the SDHC Report (Construction cost estimates in the report are based on information available at the time the report was created in 2021. Adjustments in costs since then, such as costs for construction and materials, are not reflected in the report.)
ADU Plan Templates
In addition to the ADU Development Pilot Program, SDHC is making four sets of ADU architectural plans available to the public. These plans, based on those built through the Pilot Program, range from studios to three-bedroom units with customizable options. They aim to expedite the permitting process and reduce pre-construction costs for homeowners. While these plans have received initial approval from the City of San Diego Development Services Department (DSD), they will require further site-specific review, and approval is not guaranteed. The initiative complements the Pilot Program, offering practical insights into ADU construction. Reviewing the lessons-learned report is strongly encouraged, as it highlights key considerations, including unique site conditions, SDG&E interconnection, timelines, and costs.
ADU Plans Request Form
Additional Information and Resources
Source of New Housing
ADUs are one of the top five main sources of potential additional housing units for the City of San Diego through 2028, according to SDHC’s report, Addressing the Housing Affordability Crisis: San Diego Housing Production Objectives 2018-2028.
The report estimated ADUs could produce 2,700-5,500 units over 10 years.
