ADU HELOC

Build an accessory dwelling unit (ADU) or start a home renovation project. Learn more below.


Dream it, build it

Our short-term ADU HELOC is specifically designed to help homeowners tap into their equity to build an accessory dwelling unit (ADU) or to renovate their home.

Unlike our traditional HELOC – which allows you to borrow up to 90% of your home’s current value (minus any amounts owed), an ADU HELOC allows you to use up to 125% of your home’s current value and 90% of the after-renovation value (minus any amounts owed). We will also consider any projected rental income from the ADU to help you qualify for the loan.

Another benefit is that you do not have to refinance or risk losing a low fixed rate on your first mortgage. The ADU HELOC acts as a second mortgage, and your existing first mortgage terms, rate and payment will remain untouched.

Whether you’re planning a major remodel or want to add more value to your home by building an ADU for your family, we can help.

Financing is just one part of the construction process, but it’s extremely important.

Discuss your full plans with one of our experienced Home Loan Consultants to get started.

Add value to your home with your equity

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Flexible terms

Interest-only payments for 2 years.

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Dreams imagined

Build an ADU or remodel your home.

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Quick access to cash

Fast disbursements throughout the build phase.

A Patelco member works with a Banzai financial planning coach.

Guidance and support

From a Home Loan Consultant.

ADU HELOC Rates

Variable rate, open-ended loan. Available for properties in CA. Rates Effective 11/29/2023

AmountLoan-to-ValueRange of APR1
18268$10,000 - $400,000125% as-is value
90% post-construction value
10.00% to 10.75%10.00% to 10.75%29/11/202310.00%8.5%

Frequently Asked Questions about ADU HELOC

    With a traditional HELOC, there’s a maximum amount available for you to borrow — the line of credit, which you can use for up to 10 years. Homeowners typically tap into their HELOC for immediate needs to pay off high-interest debt, medical expenses or home improvement projects. It can also serve as a safety net during emergencies. Having the line available at any time offers security, comfort and flexibility. With an ADU HELOC, the term is much shorter with a 2-year draw, followed by a 20-year repayment period. The line can only be used for construction purposes such as a home renovation, remodel or addition (ADU). If you need help identifying which type of HELOC is right for you, reach out to a Home Loan Consultant.

    In most cases, we can offer financing for up to 125% of your home’s current value – which includes your first mortgage (if any) and your new ADU HELOC. For example, if your property is worth $800,000 and you owe $600,000 on your first mortgage, you may be eligible for an ADU HELOC up to $400,000. ($800,000 x 125% = $1,000,000. $1,000,000 - $600,000 = $400,000.) Keep in mind, this depends on several other factors such as your loan approval, credit history and income. We recommend connecting with one of our Home Loan Consultants who specializes in renovations and ADUs.

    Yes. There will be closing costs that range based on your loan amount, along with a lender fee of $250. We will also partner with a construction management vendor and there will be fees paid to them at closing. There is also a monthly fee of $50 for lines up to $100,000 or $100 for lines greater than 100,000, which is charged until the project is completed. We can help you estimate your closing costs.

    ADUs have been known by many names: granny flats, backyard cottages, in-law units, secondary units and more. An ADU (accessory dwelling unit) has its own kitchen, bedroom and bathroom facilities. It can either be attached or detached from the primary residence. ADUs are meant to be an accessory to the main house and are usually smaller in size (and may have specific size limitations set by each city) and located behind or to the side of the primary home.

    If you own a home in California, you are permitted to build at least one ADU or Junior ADU (500 square feet max and attached to the primary residence) if your house falls within a residential or mixed-use zone. Additionally, to help with the housing shortage, ADU laws and regulations have eased over the years and many cities have streamlined their processes to make it easier and more affordable. If you’re considering building an ADU and need financing, speak to one of our Home Loan Consultants to see what type of loan may be right for you.

    There are many! ADUs do not require additional land, are often very cost-effective, provide passive rental income and increase the overall value of your home. They also give homeowners the flexibility to share independent living areas with family members, by helping aging parents stay close by as they require more care, or provide a private space for adult children to live and rent.

    Yes – the entire financing process for an ADU HELOC will take more time than a traditional HELOC. This is mainly due to the complex nature and paperwork required for construction, building permits, inspections and more. It’s best to have a conversation with one of our Home Loan Consultants about your project first. They can help you determine if an ADU HELOC is right for you and will then refer you to one of our construction management partners to proceed with an application. Each project is unique and we’re here to help

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Take the next step

Our Home Loan Consultants are specialized in ADU and home renovation financing and can help you determine if an ADU HELOC is right for you. Find one near you or call 800.358.8228 x1202 to get in touch.

Find a Consultant

1  Home Equity loans and lines of credit are available on California properties only. 10.00% APR (annual percentage rate) and other terms shown are accurate as of 11/29/2023 and apply to an ADU HELOC for the most qualified applicant at CLTV up to 125%. Not all applicants will qualify for the lowest rate. Eligible on primary residences only. Rates vary based on property value, credit score, line amount and other factors. The minimum periodic payment is interest-only for the first two years (“draw period”) followed by fully-amortizing payments to repay the balance over the final twenty years. No draws will be allowed during the repayment period. Payments and rate can adjust monthly. Payments will increase if rates increase. At the end of the draw period, your required monthly payments will increase because you will be paying both principal and interest. The rate is calculated using an index plus a margin. The index used is the Prime Rate as published in The Wall Street Journal Western Edition on the last business day of the month prior to the change. The current prime index is 8.5%. Minimum interest rate is 3%. Maximum interest rate is 17%.

Read the ADU HELOC Program Disclosure.

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