Is the CalHFA $40K ADU Grant Still Available?

We still get asked about the CalHFA $40,000 ADU grant on nearly every ADU discovery call, usually because a homeowner read about it somewhere online. There is a lot of outdated information circulating about this program, so here is the current, accurate status.

The program is paused, not active

The CalHFA ADU Grant Program provided up to $40,000 toward pre-development and closing costs for an accessory dwelling unit, and it was genuinely useful while it lasted. It launched with roughly $100 million in funding, distributed first-come, first-served, and financed an estimated 2,500 ADUs statewide before running out.

CalHFA's own program page has carried the same notice since December 28, 2023: the latest round of funding has been fully allocated. As of this writing there is no open application, no waitlist, and no announced date for a new funding round. If a contractor, lender, or anyone else tells you they can get you this specific grant right now, treat that as a red flag. The only reliable source for the program's status is CalHFA's own website.

What homeowners are using instead

With the state grant on hold, most ADU projects we build get funded through one of these paths:

• HELOC (home equity line of credit). A reusable credit line against your home's equity, usually with a variable rate. Good fit if you want flexibility to draw funds as construction milestones are billed.
• Cash-out refinance. Replaces your existing mortgage with a larger one and gives you the difference in cash. This resets your primary mortgage rate, so it makes the most sense if current rates are close to what you already have.
• Construction-to-permanent loan. Funds the build in stages tied to inspections, then converts into a standard mortgage once the ADU is finished. More paperwork than a HELOC, but often a better fit for a larger, ground-up detached unit.
• Renovation loan. Common when a home purchase and an ADU build are happening together, rolling both into one loan.
• Personal loan or private financing. Faster to get and useful for a smaller-scope garage conversion, though rates run higher than the secured options above.

Rates and terms shift with the market and vary by lender and credit profile, so we always recommend talking to your bank or a mortgage broker about current numbers rather than relying on a number you saw in a blog post, including this one.

Check for local and utility programs too

While the statewide CalHFA grant is on hold, some cities, counties, and utilities run their own smaller ADU incentive programs, permit fee waivers, or pre-approved plan discounts from time to time. These come and go, so it's worth a quick check with your local building department when you're scoping a project, separate from whatever the state program is doing.

How this affects your ADU budget

Since the grant isn't available for pre-development costs right now, we build your architectural, engineering, and permitting costs directly into the project budget from the start rather than assuming grant money will offset them later. See our ADU cost guide for real ranges by ADU type, so financing conversations start from an accurate number.