Last updated: •Reviewed by the aduglossary editorial team
Current ADU Loan Rates (May 2026)
Rates verified against published rate sheets and lender aggregators.
| Loan Type | Typical Rate (May 2026) | Term | Notes | Compare |
|---|---|---|---|---|
| Cash-out refinance | 6.5%–7.5% | 30yr fixed | Best if mortgage rate is below current rates | Compare lenders |
| HELOC | 7.5%–9.5% | 10yr draw / 20yr repay | Variable; risk if Fed raises | Compare lenders |
| Home equity loan | 7.25%–8.75% | 5–30yr fixed | Fixed payment, second mortgage | Compare lenders |
| Construction-to-perm | 7.0%–9.0% | 12mo IO → 30yr fixed | Most common for new-build ADU | Compare lenders |
| FHA 203(k) | 6.875%–8.0% | 30yr fixed | Renovation loan; primary residence only | Compare lenders |
| DSCR / investor | 7.5%–10.0% | 30yr fixed | No income docs; investor-friendly | Compare lenders |
| RenoFi / unsecured | 9.0%–15.0% | 5–20yr fixed | Uses after-renovation value (ARV) | Compare lenders |
Rates as of May 12, 2026. Verified against published rate sheets and lender aggregators. Actual offers depend on credit, DTI, and LTV.
ADU Loan Qualification Requirements
Minimum thresholds vary by lender. Use these as baseline guidance.
| Product | Min Credit | Max DTI | Max CLTV | Income Docs | Calculator |
|---|---|---|---|---|---|
| Cash-out refi | 620–680 | 45–50% | 80% | Full docs (W-2/1040) | Run numbers |
| HELOC | 680–700 | 43–50% | 85% | Full docs | Run numbers |
| Home equity loan | 660–680 | 43% | 85% | Full docs | Run numbers |
| Construction-to-perm | 680–720 | 43–45% | 85–90% | Full docs + builder contract | Run numbers |
| FHA 203(k) | 580–620 | 43–50% | 96.5% | Full docs (FHA limits apply) | Run numbers |
| DSCR | 660–700 | N/A (DSCR ≥ 1.0) | 75–80% | Rent rolls, NO income docs | Run numbers |
| RenoFi | 680 | 50% | 125% of ARV | Full docs + appraisal | Run numbers |
Thresholds as of May 2026. Lenders set their own overlays; actual requirements may be stricter. DTI = debt-to-income ratio; CLTV = combined loan-to-value; ARV = after-renovation value.
Already know your loan type? Run the numbers.
Free ADU loan calculator — compare HELOC, construction, and refi payments side-by-side.
Compare ADU Financing Options (2026)
Rates current as of April 2026. HELOCs track the prime rate; fixed-rate products depend on your credit and LTV.
| Loan Type | Best For | Typical Rate | Loan Amount | Approval Time |
|---|---|---|---|---|
| HELOC | Existing equity, variable rate tolerance | 7.5% - 9.5% | Up to 85% LTV | 2-4 weeks |
| Cash-Out Refinance | High equity, wanting lower fixed rate | 6.5% - 7.5% | Up to 80% LTV | 3-6 weeks |
| Construction Loan | Little equity, high future value | 7.0% - 9.0% | Based on future value | 4-8 weeks |
| Home Equity Loan | Fixed budget, lump sum needed | 7.0% - 8.5% | Up to 85% LTV | 2-4 weeks |
| Personal Loan/Unsecured | Fast funding, smaller projects | 9.0% - 15.0% | Up to $100k | 1-5 days |
ADU Construction Loans (2026)
An ADU construction loan is a short-term loan (typically 12–18 months) used to fund the build, then converted to a permanent mortgage once the unit is complete (“construction-to-perm”) or repaid by a refinance. ADU construction loans in 2026 run 7.0–9.0% interest with 10–20% down required. They release cash in draws as construction milestones are hit (foundation, framing, drywall, final), which protects you from contractor overruns but adds bank inspection overhead.
- Best for: homeowners without enough equity for a HELOC or cash-out refi.
- Rate: 7.0–9.0% in 2026 (variable during construction, locked at conversion).
- Down payment: 10–20% of total project cost.
- Draw schedule: 4–6 milestone draws over 6–12 months.
- Underwriting: requires fixed-price contract, licensed contractor, and approved plans.
Need a precise estimate of the loan amount you’ll need? Run the numbers with our ADU loan calculator or see total project pricing in our ADU construction cost by city guide.
Which Option Is Right for You?
ADU Grants & Assistance Programs (2026)
The California CalHFA grant is closed with no relaunch date. Here's what's actually active in 2026 — verified against official program pages.
⚠️ CalHFA ADU Grant: Fully allocated as of December 28, 2023. No relaunch date confirmed. Check calhfa.ca.gov/adu for updates. Beware of scammers claiming to help access funds.
CalHFA ADU Grant
California
Fully allocated Dec 2023. No relaunch date confirmed. Monitor calhfa.ca.gov/adu for updates.
NYC Plus One ADU
New York City, NY
Reopened March 2026 with limited funding. Owner-occupied 1–3 family homes only. Income-qualified.
Vermont VHIP 2.0
Vermont
0% interest forgivable loan. Must rent at or below fair market rate for 5–10 years.
Portland SDC Waiver
Portland, OR
System development charge waivers for qualifying ADUs. One of the most generous fee waiver programs in the U.S.
Boston ADU Assistance
Boston, MA
$7,500 outright grant plus up to $50,000 in 0% deferred financing. Must attend ADU workshops.
MassHousing ADULP
Massachusetts
State-backed ADU lending program for qualifying homeowners statewide.
Got Your Financing? Now Manage the Build.
TerraLine connects your loan, budget, and schedule in one place. See exactly how much you've drawn, what's committed, and what's left — no spreadsheets needed.
Need Help Choosing a Loan Type?
Our in-depth construction loan guide compares 9 ADU financing products side by side — rates, terms, qualification requirements, and which is best for your situation.