It is a great investment to build an ADU, casita, or granny flat. However, it is common knowledge that the popularity of these residential spaces has increased over time. These places can provide you with extra space or allow you to earn a consistent income. Further, like other great investments, ADUs also require a significant upfront cost. But don’t worry, because the California Federal Housing Agency (CalHFA) will launch a $40,000 ADU grant program in January 2022. Similarly, this program is designed to fund the residents of California so that they can make their own ADU. However, this is exciting news for those who are looking to build affordable housing but don’t have much funding. However, if you are a homeowner who wants to add an extra space to your house, then consider applying for an ADU grant.
How does the California ADU grant program work?
You can get a grant in a few simple steps. The good news about CalHFA is that you don’t have to pay it back, as the government provides $1099 to California residents. However, you have to pay the taxable amount on the grant next year. Furthermore, determining your eligibility for this grant is an important part of the process. So whether you are building a detached ADU or garage conversion, you must know the eligibility criteria for grants. Additionally, the government of California has structured this grant to provide financial assistance to offset the costs associated with building an ADU.
- Qualifications needed to apply for the grant
The first criterion is to know the qualifications for the ADU California grant.
- Your property must be in your possession at the time of building the ADU.
- It is necessary for you to be on the deed.
- Further, it is necessary to have a single-family zoning designation on the possessed property.
- You must earn no more than $180,000 per year in Los Angeles County, as of July 2022, in order to qualify for CalHFA.
- A pre-approved CalHFA lender or a participant in a special financing grant program must submit the application.
- Apply through a special financing participant or CalHFA pre-approved lender
The loan is typically obtained in conjunction with a construction or renovation loan. In addition, you can only get the accumulative construction loan through a CalHFA lender or a special financial participant. Here is the list of lenders through whom you can apply and get the loan.
The top grant lenders in California
|Supreme Lending||Platinum Home Mortgage Corporation||Primary Residential Mortgage, Inc||LoanDepot||Mortgage Management Consultants, Inc.||Priority Financial Network|
|Land Home Financial Services||MLD Mortgage, Inc. dba The Money Store||Envoy Mortgage, Ltd.||Academy Mortgage Corporation||Homebridge Financial Services, Inc||American Pacific Mortgage|
|Evergreen Home Loans||Caliber Home Loans||Flagstar Bank||OneTrust Home Loans (a dba of CalCon Mutual Mortgage)||Ask-La-Tex Financial Services, Inc||Guild Mortgage, LLC|
Furthermore, the loan accumulated with the grant. While in the construction phase of the ADU, the lender pays your license to general contractors. It is because you are now verified for the process of adu grant program in Los Angeles. However, the drawback at the moment is that most of CalHFA’s approved lenders are giving loans for renovations only. As a result, many homeowners are hesitant to switch from their current low-interest, fixed-rate mortgage to one with today’s rising interest rates. Further, there is no lender that is offering a loan product without interfering with your first mortgage.
Are California ADU grants beneficial and disadvantageous?
The pros of getting an ADU grant from the California government are:
- Access to financial assistance for free to help pay for construction costs up to $40,000.
- Streamlined permitting process for approved ADUs, reducing the overall timeline for completion.
- Local governments would benefit from an increased tax base
- The availability of more employment opportunities for residents
- Additional resources for home maintenance and improvement projects.
- Increased housing affordability for low and middle-income households
- Expanded availability of affordable rental units
- Opportunity to add more value to existing homes
- Reduction in congestion and pollution from transportation.
The Cons of getting an ADU Grant from the California Government:
- Homeowners may be responsible for paying taxes on the granted money.
- Construction or renovation work must meet state standards, which can require significant resources and time.
- Some applicants may find it difficult to meet the eligibility requirements.
- Stringent building regulations and zoning restrictions can increase costs or limit options.
- The reduced incentive to develop multi-unit housing in favour of single-unit ADUs
- Possibility of an influx of low-income residents who may struggle with financing rent or upkeep.
- Your builder has to closely work with the grant lender and provide the proper documentation at each step.
- Also, the builder has to arrange a site inspection to verify the applicant for the adu California grant.
FAQs to get the grant for ADU
Q1. Do I need to submit any documents to apply for the California ADU grant program?
CalHFA will require the following documents to verify your eligibility for the grant.
- Income statement
- Previous year’s tax returns
- All the utility bills including electricity, gas, and water
- Nature of work
Q2. If building an ADU is not in my plan, can I reserve my grant now?
There is no specified deadline for the completion of an ADU in California. So you can apply and reserve your grant if you meet the criteria. However, as many homeowners as possible wish to get this grant.
Q3. Is there anything else I need to pay besides the grant?
Unfortunately, you do have to pay tax on the grant amount.