If you’re like many homeowners in Long Beach with some space in your backyard or above your garage, you may have considered building an accessory dwelling unit (ADU) on your property. An ADU can bring in valuable rental income or provide a family with the space they need for an aging family member or a young adult who isn’t quite ready (or financially able) to launch out on their own. ADUs can also increase property values, making their construction a great financial decision for just about any property owner.
As mentioned in this article by Long Beach architect, Mark Grisafe, ADUs are easier to get approved than ever, since the State of California eliminated a lot of the restrictions associated with ADUs and also reduced or eliminated some of the fees involved. Even if you live in a community with an HOA, building an ADU on your property is now a viable option, since HOAs are no longer allowed to restrict their construction within their communities (with very few exceptions).
Recently, the State of California went one step further in encouraging the construction of ADUs by providing funding for the pre-development and closing costs associated with ADUs. The California Housing Finance Agency (CalHFA) has set up an ADU Grant Program that offers eligible homeowners grants up to $40,000, which they can use to cover things like ADU architectural design, site prep, soil tests, impact fees, property surveys, and energy reports.
Like many government programs, there are income limits associated with the ADU Grant. For example, in Los Angeles County, only homeowners with an income of $180,000 or less are able to qualify for the grant.
Homeowners wishing to apply for a CalHFA ADU Grant should fill out a construction loan application with one of the organization’s approved lenders (which can be found on the CalHFA website). Once the construction loan is approved for the ADU, the lender will then prequalify the homeowner for the CalHFA ADU Grant. All pre-development costs for the ADU will be paid initially through the construction loan, but then the lender will submit the pre-development receipts and invoices (provided by the homeowner) to CalHFA. CalHFA will send a reimbursement to the loan account, which will reduce the principal balance of the construction loan, up to $40,000.
If you are a Long Beach homeowner with low to moderate income who has been on the fence about building an ADU, this program can be a huge incentive to get you off the fence! However, homeowners would be wise not to wait too long to pursue this opportunity, since funds are limited. CalHFA has indicated that the program will conclude when it has dispersed $100 million in grants. While this sounds like a lot of money, that only amounts to grants for 2,500 homeowners in the entire state of California (a state with more than 39 million residents).
If you want to get in on this limited opportunity, contact one of the CalHFA-approved ADU Grant Program Lenders to get started.