What are the 2020 opportunities in ADU lending?


This Blog is an update to our Additional Dwelling Unit (ADU) Blog published in Sept. 2018.  Many new developments have happened in the last 1½ years relating to ADU’s that influence ADU requirements, development, construction, laws and financing.

Recently I organized and spoke on a California Mortgage Association (CMA) Seminar Panel regarding ADU’s and this research and information should be valuable to our readers.

The requirements for ADU’s have only increased in California.  California’s housing crisis continues with our State being short 1.5 Million housing units.  New ADU’s help alleviate housing shortages, leverages existing infrastructure and assists in providing extra space in these Quarantining and Social Distancing times.  ADU’s also provide needed income as rentals, help Seniors trying to downsize and multi-generational families wanting to cohabitate.

Options for construction on types of ADU’s continue to expand.  ADU’s take the following sizes and shapes: Stick Built, Panel, Modular and Prefabricated.   Tiny Homes are also available although those structures are typically not permanently affixed and are considered Personal Property vs. Real Estate.

California State Government Legislatures tired of local ordinances shutting down ADUs with NIMBYs (Not In My Back Yard-ers) and BANANAs (Build Absolutely Nothing Near Anyone Nor Anything-ers) and passed several new laws for ADU’s:

  • SB 13 – Makes it easier for CA homeowners to build ADUs on their properties
  • SB 1069 – Reduces parking requirements to one space per bedroom or unit.
  • AB 2299 – Requires the ADU to include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the primary single-family dwelling is situated.
  • AB 587 – Provides that local agencies may now allow ADUs to be sold or conveyed separately from a primary residence if certain conditions are met
  • AB 68 – Creates a right to build two new units of rental housing on any single-family lot in California, for a total of three units of housing
    • Requires local agencies to take action on an ADU project within 60 days of receiving a complete building permit application
  • AB 881 – Provides for the creation of local ADU laws, in accordance with specified standards and conditions

Fortunately, multiple types of ADU financing including HUD, HELOC, Fannie Mae, Freddie Mac, Bank Construction, Jumbo and Hard Money are available. If a homeowner wants to keep that great low interest 1st TD but needs cash for the ADU project or some other business goal, Business Purpose Hard Money 2nds are a great financing alternative.


The Mortgage Vintage ADU Loan Program can facilitate this additional ADU income opportunity whether you are an owner occupant wanting to add an ADU or a Real Estate Investor looking to fix and flip a property.  Please contact us at 949-632-6145 or visit our website at www.m ortgagevintage.com or www.crowdtrustdeed.com today.