ADU Support Grants Help Low-Income Homeowners Add Housing and Income

What an ADU Is and Why It Matters

An accessory dwelling unit (ADU) is a smaller, independent residential unit on the same lot as a primary home. Common types include detached backyard cottages, converted garages, basement apartments, and additions with separate entrances. ADUs have become a central strategy in state and local efforts to ease the housing shortage because they add supply without changing the character of existing single-family neighborhoods.

For homeowners, an ADU can provide rental income, house an aging parent or adult child, or create a flexible home office. For low-income homeowners, though, the up-front costs of predevelopment and construction have often been out of reach — which is exactly the gap ADU grant programs are designed to close.

California's CalHFA ADU Grant Program

The California Housing Finance Agency (CalHFA) launched an ADU Grant Program offering up to $40,000 to reimburse homeowners for predevelopment costs such as site prep, architectural designs, permits, soil tests, impact fees, and property surveys. The program was designed to lower the initial cash barrier that keeps many lower-income homeowners from starting an ADU project.

The program prioritized homeowners earning less than 80% of Area Median Income (AMI). Funds moved quickly once each round of funding opened, and CalHFA paused and reopened the program in phases as money was replenished.

Los Angeles County and Neighborhood Housing Services

Neighborhood Housing Services of Los Angeles County (NHS LA County) was designated a participating lender for the CalHFA ADU Grant, offering application assistance, construction-period lending, and homeowner counseling. NHS emphasized ADUs as a wealth-building tool for low-income households and communities of color.

San Diego Housing Commission

The San Diego Housing Commission's ADU Finance Program provides construction loans (reportedly up to $200,000) along with technical assistance at no cost to homeowners. The program walks homeowners through the often-complex ADU process, from feasibility through permitting to construction.

New York's Plus One ADU Program

New York State Homes and Community Renewal launched the Plus One ADU Program, offering grants of up to $125,000 for income-eligible homeowners to build or rehabilitate a code-compliant ADU. Ulster County runs a local version, Plus One ADU Home, that requires participating homeowners to rent the unit at an affordable rate for at least 10 years in exchange for the grant.

Who Typically Qualifies

Eligibility varies by program, but most ADU grant programs require:

• The applicant to own and occupy the primary home.
• Household income at or below a set percentage of Area Median Income (often 80% or 120% AMI).
• The property to meet local zoning and code requirements for ADUs.
• A commitment, in some programs, to rent the unit affordably for a set number of years.

What the Grants Cover

Depending on the program, grants and forgivable loans can cover:

• Architectural, engineering, and site design work.
• Permits, impact fees, and utility hookups.
• Soil, environmental, and survey reports.
• Construction financing interest during the build.
• In some programs, a portion of actual construction costs.

How Homeowners Can Get Started

Low-income homeowners interested in an ADU should:

• Check with their state housing finance agency for an active ADU grant program.
• Contact a HUD-approved housing counseling agency for free guidance.
• Research local ADU ordinances, since feasibility depends heavily on zoning and setbacks.
• Request a feasibility consultation from a participating lender or nonprofit.

ADU grants will not make construction free, but they can meaningfully lower the first financial hurdles — often the reason promising projects stall before they start.