The California Housing Finance Agency's (CalHFA) ADU Grant Program provides up to $40,000 for preconstruction costs associated with an ADU.

To qualify, the homeowner must first obtain a loan from a CalHFA-approved lender.

You also need to meet the income range, which varies by county.

1. The homeowner needs to pull a construction or renovation-type loan. This is because the program is designed for homeowners who need financial assistance. Pre-approved lenders link is provided below:
   https://www.calhfa.ca.gov/apps/approvedlenders/.
2. Once the loan is approved, the lender will forward your paperwork to CalHFA. If it is approved, $40,000.00 will be added to the pre-existing loan funds. We do want to clarify that the $40,000.00 will not be handed to you.
3. If the application process is successful, the following will be made available to you:

• $40,000 from CalHFA's grant that will only cover pre-construction costs.
• $X amount from the lender that will be used to cover construction costs.

The million dollar question you may be wondering is: Who is eligible for the grant?
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There are two primary requirements in order to be eligible:

1. You need to live at the property where the ADU is being built.
2. You need to meet the income limits. Income eligibility requirements vary by county. A list is provided below for your reference:
   https://www.calhfa.ca.gov/homeownership/limits/income/income.pdf

Earlier we stated that the funds would only be applicable for pre-construction costs (also known as soft costs)
We want to clarify what those types of costs are to prevent any confusion.

• Pre-construction costs include the following:
• Architectural or Engineering Plans - these are the plans that will determine how your ADU will be designed.
• Permits/City Fees - permits are issued by your local city or county in order to obtain permission to build your ADU.
• Soil Reports/Inspections - If required, the soil report will help determine the integrity, strength and other factors of the land where your ADU will be built.
• Impact Fees - these fees are paid to the municipality. They offset the financial impact of the new development on public infrastructure.
• Topographical Survey - This report will be used to determine boundary lines and other restrictions of your property so the ADU is not obstructing or encroaching anywhere it shouldn't.
• Energy Reports - These reports will give information about the ADU's energy use. The most common report requested for ADU's in the State of California is Title 24.

If your pre-construction costs end up being less than $40,000, the remaining funds can be applied to non-recurring closing costs.
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Non-recurring closing costs are costs that are only paid once, for example loan fees and interest rate buydowns. This will help lower your interest for the loan.
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Unfortunately, if you already spent out of pocket for these types of costs, the money cannot be reimbursed to you.
However, the grant money can be applied by your lender to reduce the loan principal.
Please remember to save your receipts. You need them in order to send them to your lender to reduce your loan principal.
This will reduce the amount you need to pay back for the loan.