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Accessory Dwelling Units (ADU)

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

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
  • No cost to the homeowner

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.)

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.

City of San Diego ADU Bonus Program

Please contact Genevieve Hernandez at or 619-578-7588 if you have questions regarding ADU Bonus Program affordability requirements.

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