ADU Financing Guide

ADU Financing in Sacramento: How to Build & Fund Your Backyard Home

Accessory Dwelling Units (ADUs) are gaining popularity in Sacramento! Whether you’re looking to generate rental income, provide a space for family, or increase your property’s value, an ADU is a smart investment. But let’s face it—the big question is: How do you finance it?

In this guide, we’ll explore various ADU financing options in Sacramento, including costs, loan types, and expert tips to make your backyard home a reality. If you’re considering building an ADU, we can help you find the best financing solution! 🏡💰

What Is an ADU?

An Accessory Dwelling Unit (ADU) is a small, secondary housing unit on your property. It can be:

✅ Detached – A standalone structure separate from the main house
✅ Attached – An addition connected to the main house
✅ Garage Conversion – Transforming an existing garage into a living space
✅ Junior ADU (JADU) – A unit within the existing home, often converting a bedroom or other space

Sacramento homeowners are building ADUs because they:

✔ Create extra income through rental opportunities
✔ Increase property value with additional living space
✔ Provide housing for family or guests
✔ Make smart use of backyard space

Plus, California has made it easier than ever to build an ADU, with reduced permit costs and streamlined approval processes. (Source: CalHFA ADU Grant)

👉 Thinking about building an ADU? Let’s talk financing! Call or text us at 916-465-6639, or start your loan application HERE.

How Much Does It Cost to Build an ADU in Sacramento?

Building an ADU in Sacramento varies based on size, materials, and construction type. Here’s a general breakdown:

💰 Detached ADU: $130K–$430K (Source)
💰 Garage Conversion: $80K–$150K (Source)
💰 Permits & Fees: $3K–$11K
💰 Utility Hookups: Varies depending on location and access

How Much Can You Rent an ADU For in Sacramento?

The average rent for a one-bedroom apartment in Sacramento is $1,898, meaning ADUs often rent for $1,500–$2,500 per month, depending on size and location.

A studio or small one-bedroom ADU typically rents for $1,500–$1,800.
A larger ADU (600+ sq. ft.) can rent for $2,000–$2,500.

📌 Sources:

👉 Want an exact estimate? Talk to an expert! Call 916-465-6639 or apply for a loan HERE.

How to Finance an ADU in Sacramento

ADU financing is easier than you think! Here are your best options:

1. Home Equity Loan or HELOC

✅ Best for: Homeowners with significant home equity
✅ Loan Amount: Up to 85% of your home’s value
✅ Pros: Competitive rates, flexible repayment options

2. Cash-Out Refinance

✅ Best for: Homeowners who want to refinance their mortgage
✅ Pros: Access a lump sum for ADU construction

3. Construction Loans

✅ Best for: Financing ADU builds from scratch
✅ Pros: Covers the full cost of construction, then converts into a mortgage

4. Renovation Loans (FHA 203k & Fannie Mae HomeStyle)

✅ Best for: Older homes needing upgrades & ADU additions
✅ Pros: Wraps ADU costs into your mortgage

5. ADU Grant & Government Programs

✅ Best for: Low-to-moderate income homeowners
✅ Pros: Up to $40K in free money for pre-construction costs! (CalHFA ADU Grant)

📞 Not sure which loan is right for you? Let’s talk! Call 916-465-6639 or apply for ADU financing HERE.

Why Work with New Way Mortgage?

Not all lenders understand ADU financing. Big banks might say “no” when better financing options exist! At New Way Mortgage, we help homeowners in Sacramento find the best ADU financing solution by working with multiple lenders to get you:

✅ Lower rates & better terms
✅ Faster approvals
✅ Personalized loan solutions

Let us take the stress out of financing your ADU. Call or text us at 916-465-6639 today!

Final Thoughts: Is an ADU Worth It?

Building an ADU is one of the smartest investments you can make in Sacramento. Whether you’re looking for extra rental income, a home office, or a guest house, an ADU adds long-term value to your property.

🚀 Ready to make it happen? We’re here to help. Call or text 916-465-6639, or start your financing application HERE.

FAQs

❓ How much rental income can an ADU generate?
📌 In Sacramento, ADUs rent for $1,500–$2,500 per month, depending on size and location. (Source)

❓ What’s the best ADU loan for first-time builders?
📌 HELOCs and Construction Loans are great options, but we’ll help you find the best fit!

❓ Are there tax benefits to building an ADU?
📌 Yes! You may be able to deduct mortgage interest, depreciation, and expenses (consult a tax advisor).

❓ How long does it take to get ADU financing?
📌 Loan approvals typically take 2-6 weeks, depending on the lender.

❓ Can I build an ADU on an investment property?
📌 Yes, but financing options are more limited than for primary residences.

👉 Have more questions? Let’s chat! Call or text 916-465-6639, or apply online HERE.

💡 Ready to Build Your ADU? Let’s Get You Financed!

We make ADU financing easy so you can focus on designing your perfect backyard home.

🔹 Call or text us now at 916-465-6639
🔹 Apply online today HERE
🔹 Subscribe to our YouTube channel for mortgage tips: www.newwayhome.com

Let’s turn your ADU dreams into reality! 🚀