ADU costs deter many people from developing one of their own. However, the multitude of benefits to having one have some people searching for a way to make it more affordable. If you are one of those people, here is how to get ADU loan forgiveness.
How Much Does An ADU Cost?
Before we dive into how to get your loans forgiven, let’s talk about how large the loans need to be to build an ADU.
On average, a new construction ADU of 499 square feet costs around $161,700 – $201,125. Most people build the units bigger than this, meaning your costs can get be quite high quickly, especially if you have expensive design tastes.
Who you hire as your contractor and what the materials you use to build your ADU will greatly impact your costs. As you can see, building an ADU is an investment that needs secure financial planning for you in order to achieve it. Luckily though, there are a few cities that offer ADU loan forgiveness to make paying for your ADU easier.
Los Angeles Forgiveness
Los Angeles county is running a pilot program that provides us a subsidy of up to $75,000 per ADU in the form of a forgivable loan. The only stipulation is that you must agree to rent to a homeless family or someone with a housing choice voucher. Do so, and your loan that will likely cover over 50% of your ADU costs will be forgiven. In the other words, it is kind of like receiving a grant that doesn’t have to be paid back as long as you follow the rules.
Santa Cruz City Forgiveness
Santa Cruz will loan eligible homeowners up to $40,000 to develop an ADU. The loan will be deferred for 20 years, and then forgiven entirely if all terms are met.
The terms are quite simple. The homeowner must rent the unit to a low-income household at an affordable price for 20 years. They have the option to opt-out and pay the loan back at a 3% interest rate if they would like, but we don’t think many people will.
conclusion
However, the multitude of benefits to having one have some people searching for a way to make it more affordable. If you are one of those people, here is how to get ADU loan forgiveness. Most people build units bigger than this, meaning your costs can get quite high quickly, especially if you have expensive design tastes. Who you hire as your contractor and what materials you use to build your ADU will greatly impact your costs. Los Angeles county is running a pilot program that provides a subsidy of up to $75,000 per ADU in the form of a forgivable loan. The only stipulation is that you must agree to rent to a homeless family or someone with a housing choice voucher. Santa Cruz will loan eligible homeowners up to $40,000 to develop an ADU. The terms are quite simple. The homeowner must rent the unit to a low-income household at an affordable price for 20 years.
