What credit score do I need to finance an ADU in Sacramento?

Most ADU loan programs require a minimum 680 credit score. Some programs accept 640, but at higher rates. Scores above 740 qualify for the best rates.

Can I use rental income from the ADU to qualify for the loan?

Some ADU-specific loan programs allow projected rental income to count toward qualification. Traditional HELOCs and refinances typically do not.

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Costs & Financing11 min readFebruary 1, 2026

How to Finance Your Sacramento ADU: 7 Loan Options Compared

Most Sacramento homeowners finance their ADU through a HELOC, cash-out refinance, or construction loan. Here's how each option works and which makes sense for different situations.

Option 1: Home Equity Line of Credit (HELOC)

A HELOC lets you borrow against your home's equity as needed, paying interest only on what you draw. This works well for phased ADU projects.

Typical rate: Prime + 0.5–2% (currently 8–10%)
Draw period: 5–10 years
Repayment period: 10–20 years
Best for: Homeowners with significant equity and phased construction timelines

Option 2: Cash-Out Refinance

Replace your existing mortgage with a larger one and take the difference in cash. Works best when current rates are lower than your existing mortgage rate.

Option 3: Construction Loan

A short-term loan that funds construction in draws as work progresses. Converts to a permanent mortgage upon completion. Requires more documentation but offers higher loan amounts.

Option 4: ADU-Specific Loan Programs

Several lenders offer ADU-specific products that underwrite based on projected rental income, allowing higher loan amounts than traditional home equity products.

RenoFi ADU Loans
Mosaic ADU Financing
Aven Home Equity Card
Local credit union ADU programs

Option 5: CalHFA ADU Grant Program

California Housing Finance Agency offers grants up to $40,000 for pre-development costs (design, permits, site prep) for owner-occupied properties. Income limits apply.

Pro Tip: CalHFA grants are competitive and funds are limited. Apply early in your planning process.

Option 6: Personal Loan

For smaller projects (garage conversions under $100K), a personal loan can work. Rates are higher (10–20%) but the process is faster and simpler.

Option 7: Builder Financing

Some Sacramento ADU builders offer in-house financing or partnerships with lenders. Convenient but compare rates carefully — builder financing is not always the best deal.

Related Resources

Pair your financing plan with these guides on costs, investment returns, and builder selection.

Sacramento ADU Cost Guide 2026 — Know exactly how much you need to finance
Best Sacramento Neighborhoods for ADU Investment — Where your financing dollars will generate the highest returns
Can You Sell Your ADU as a Condo? — A new exit strategy that could change your financing calculus
ADU Cost Calculator — Estimate your total project cost before applying for a loan