Financing
Find the best way to pay for your ADU
Answer 6 quick questions and see which financing fits your home, your budget and your plans — with an example monthly payment and what to do next.
Free · no credit check · not an application
HCD-approved plansYour best match
Typical rent for this model in San Jose: /mo. After a 5% vacancy reserve that’s /mo vs. this payment.
Your own example numbers — not a loan offer or a quote of rates. Real rates, fees and terms come only from a lender.Compare
5 ways to pay for an ADU
Plain-English pros and cons. Your quiz result is highlighted.
Way 1 of 5
HELOC / home equity loan
Keep your low-rate mortgage
Good
- Your current mortgage stays as it is
- HELOC: draw money as the project needs it
- Home equity loan: one fixed-rate lump sum
Watch out
- HELOC rates are usually variable
- Your home is the collateral
Best forOwners with a low mortgage rate and enough equity.
Way 2 of 5
ADU construction / renovation loan
Borrow on the after-build value
Good
- Based on your home’s value with the ADU added
- Often lets you borrow more than today’s equity
- Marketplaces like RenoFi match you with lenders — up to 90% of after-build value, varies by lender
Watch out
- More paperwork: plans, quote, appraisal
- Fewer lenders offer it — compare 2–3
Best forOwners with little equity today.
Way 3 of 5
Cash-out refinance
One new mortgage, one payment
Good
- Can offer a lower rate than a second loan
- Longer term = lower monthly payment
Watch out
- You give up your current rate
- Closing costs on the whole loan
Best forOwners whose current rate is already 6%+, or a paid-off home.
Way 4 of 5
Renovation mortgage
Fannie Mae HomeStyle · Freddie Mac CHOICERenovation
Good
- One loan to buy or refinance plus build
- Both programs allow ADUs; HomeStyle covers up to 75% of the as-completed value
Watch out
- More paperwork and a longer closing
- FHA 203(k) covers attached ADUs and conversions — not usually a detached ADU
Best forBuyers, or owners refinancing anyway.
Way 5 of 5
Cash
The simplest path
Good
- No interest, no closing costs
- No appraisal or lender timeline
- Easiest to schedule
Watch out
- Ties up savings — keep an emergency fund
Best forOwners with savings who want it simple.
Planning to rent it out? The rent works for you twice
First it covers your monthly payment. Then, once the ADU is leased, Fannie Mae, Freddie Mac and FHA let lenders count its rent toward your income — up to 30% of qualifying income — when you refinance later.
How it works with us
From quiz to keys in 4 steps
Take the quiz
Know which option to ask lenders about.
Get your fixed price
We check your lot and give you an all-in quote. Lenders need it, along with our HCD-approved plans.
Get pre-qualified
Talk to 2–3 lenders. HCD approval means your ADU is appraised and financed like a regular home.
We build, you move in
Built in our Lathrop factory while your site is prepared, then installed in about a week.
Be ready
What lenders will ask for
Have these ready and pre-qualification goes much faster. We provide everything about the ADU itself. Tick what you have — it’s saved in this browser.
You
Your home
Your ADU
Questions
Financing questions
See the full price breakdown, the ROI calculator, or call (209) 214-6845.
Do you offer in-house financing?
No. Bay Modular is not a lender. We give you a fixed all-in price, HCD-approved plans and all the ADU paperwork a lender needs, and you choose the lender.
Will a bank finance a modular ADU?
Yes. Our plans carry California HCD approval, so the ADU is real property — appraised and financed like a regular home, not as a manufactured home.
What’s the most common way to pay?
Most homeowners borrow against the equity in the home they already own — usually with a HELOC, a home equity loan or a cash-out refinance.
I don’t have much equity. Can I still build?
Often, yes. ADU construction and renovation loans look at your home’s value after the ADU is added, which can let you borrow more than today’s equity.
Can my ADU rent help me qualify for a loan?
Yes, once the ADU exists and is rented. Fannie Mae, Freddie Mac and FHA let lenders count ADU rent toward qualifying income, up to 30% of the total — useful when you refinance later. For the build loan itself, most lenders look at your current income.
Are there grants for building an ADU?
The CalHFA ADU Grant (up to $40,000 for pre-development costs) has been fully allocated since December 2023, and no new round is open. CalHFA warns that anyone offering to get you this grant is a scam. Check your city — some offer fee waivers or local programs.
Should I refinance my low-rate mortgage?
Usually not. If your rate is low, a HELOC or home equity loan lets you keep it and borrow only what the ADU needs.
Does taking the quiz affect my credit?
No. There is no credit check and your answers are not sent anywhere — they stay in your browser.
Is there a discount right now?
Yes — launch pricing (30% off our published home prices) is already in every price, through December 31, 2026. Ask us for your exact price, then plug it into the quiz.
Free · no obligation
Get a price your lender can work with
Send us your address. We’ll check your lot and send a fixed all-in price plus the HCD-approved plans and specs lenders ask for.
HCD-approved plans (#1585366) · 2-year warranty · factory in Lathrop, CA
- 1Send your addressAbout a minute
- 2Get your fixed all-in priceModel, site work, permits — one number
- 3Take it to a lenderWith plans and specs they need
Bay Modular is not a lender and does not arrange, broker or make loans. Information on this page is general and educational — not financial, tax or legal advice, and not an offer of credit. Rates, terms and approval depend on the lender and your situation. RenoFi is shown only as an example of a lender marketplace; we are not affiliated. Sources: Fannie Mae Selling Guide B2-3-04, B3-3.8-02, B5-3.2-01/02; Freddie Mac ADU Fact Sheet (Feb 2026) and CHOICERenovation FAQ; HUD Handbook 4000.1 (FHA 203(k), ADU rental income); CalHFA ADU Grant Program page; RenoFi loan terms. Updated October 2026.