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Your Garden Suite Financing Options
1
Home Equity Line of Credit (HELOC)
- How it works: Borrow against your home's equity
- Benefits:: Lower rates, flexible access, pay interest only on what you use
- Best for: Phased construction, budget flexibility
- Amount: Up to 80-85% of your home's value (minus mortgage)
2
Mortgage Refinancing
- How it works:Replace existing mortgage with higher amount, receive cash difference
- Benefits: Single payment, potential better rates, access to 90% of property value
- Best for: Homeowners with substantial equity who want lump sum funding
- Recent support: Government now allows refinancing specifically for ADUs
3
Federal Secondary Suite Loan
- How it works:Government-backed loan for secondary suites
- Benefits: Low interest (~2%), up to $80,000, 15-year term
- Best for: Bridging financing gaps, affordable dedicated funding
- Availability: Launched 2025, specifically for garden suites
4
Construction/Renovation Loans
- How it works:Funds released in stages as construction progresses
- Benefits: Matches cash flow, converts to mortgage after completion
- Best for: Custom builds, multi-phase projects
- Note: Requires detailed cost and timeline documentation
5
Second Mortgage/Home Equity Loan
- How it works: Fixed loan secured by home equity
- Benefits: Predictable payments, stable terms, easier qualification
- Best for: Homeowners who prefer fixed payment structure
- Consideration: Typically higher rates than refinancing
6
Private/Specialty Lenders
- How it works: Lenders specializing in ADU financing
- Benefits: Faster approval, flexible criteria, considers rental income
- Best for: Self-employed borrowers, unique situations
- Consideration: Higher costs, more flexible underwriting
Smart Financing Tips
1
Before You Apply:
- Get Pre-Approved - Know your budget before designing
- Work with ADU-Experienced Brokers - They know best programs
- Check Grants First - Reduce loan amount with available incentives
- Consider Rental Income - Many lenders include this in qualification
2
Maximize Your Financing
- Combine Options: Use grants with loans to minimize borrowing
- Plan for Phases: Match financing to construction stages
- Compare Rates: Different lenders offer varying terms for ADUs
Compare Financing Options
Choose the best way to finance your Garden Suite / ADU project. Each option offers different benefits depending on your goals and timeline.
HELOC
Best For
Flexible access
Key Benefit
Lower rates, pay as you go
Consideration
Variable interest rates
Refinancing
Best For
Lump sum funding
Key Benefit
Single payment, longer terms
Consideration
Resets mortgage rate
Federal Loan
Best For
ADU-specific needs
Key Benefit
2% interest, $80,000 max
Consideration
Limited to $80,000
Construction Loan
Best For
Staged building
Key Benefit
Matches project cash flow
Consideration
More documentation needed
Second Mortgage
Best For
Fixed payments
Key Benefit
Predictable, stable
Consideration
Higher interest rates
Private Lenders
Best For
Fast approval
Key Benefit
Flexible criteria
Consideration
Higher overall cost
