How to Finance
Your ADU Build
Compare 5 loan options side-by-side. See monthly payments, total interest, and whether rental income will cover your costs — all in one view.
ADU Financing Calculator
Compare loan options side-by-side and find the best way to finance your ADU build.
Project & Finances
Leave blank for auto-estimate based on California market data
Financing Comparison
Detached ADU in California · $300,000 build cost · Est. rent $1,943/mo
Highest monthly cash flow at +$894/mo with a 9.3-year break-even. Max borrowable: $100,000 (may not cover full cost).
| Metric | HELOC | Cash-Out Refi | Construction Loan | FHA 203(k) | Personal Loan |
|---|---|---|---|---|---|
| Max You Can Borrow | $125K | $100K | $100K | $772K | $100K |
| Monthly Payment | $885 $885/mo draw | $2,661 | $699 $667/mo construction | $5,449 | $1,739 |
| Total Interest Paid | $242K | $558K | $160K | $1.2M | $46K |
| Rental Income Covers? | Yes | No | Yes | No | No |
| Cash Flow (mo) | +$708 | -$1,068 | +$894 | -$3,855 | -$145 |
| Break-Even | 14.7 yrs | N/A | 9.3 yrs | N/A | N/A |
This calculator is for informational purposes only. Consult a financial advisor or lender for advice specific to your situation.
How to Finance an ADU in 2026
Financing an Accessory Dwelling Unit is one of the biggest decisions in the ADU process. The right loan can mean the difference between positive monthly cash flow from day one and years of out-of-pocket payments. Here's what you need to know about each option.
HELOC (Home Equity Line of Credit)
HELOCs are the most popular ADU financing tool because of their flexibility. You borrow against your home equity up to 85% LTV, pay interest-only during the 10-year draw period, then switch to principal-plus-interest repayment. The variable rate means payments can change, but the low initial payments make construction more manageable.
Cash-Out Refinance
A cash-out refinance replaces your existing mortgage with a larger one, giving you the difference in cash. This works well if current rates are close to your existing rate. You get a fixed rate and single payment, but you restart your mortgage clock and pay interest on your full balance.
Construction Loan
Construction loans provide funds in stages as your ADU is built. You pay interest-only during the 12-month construction phase, then the loan converts to a permanent mortgage. These require more paperwork (plans, contractor bids, inspections) but are purpose-built for new construction.
FHA 203(k)
FHA 203(k) loans allow just 3.5% down and roll construction costs into a single mortgage. The tradeoff is mandatory mortgage insurance (MIP) — both upfront (1.75% of loan) and monthly (0.55% annually). This increases your total cost but provides access to homeowners with less equity.
Personal Loans
Personal loans require no home equity or collateral but come with higher rates (11-12%+) and shorter terms (5-7 years). They work for smaller projects like garage conversions or JADUs where total costs are under $100K. The higher payments make cash flow tighter but you avoid putting your home at risk.
Disclaimer: This calculator is for informational purposes only. Actual rates, terms, and availability depend on your credit profile, lender, and market conditions. Consult a financial advisor or lender for advice specific to your situation.