To be eligible for the Pasadena Second Unit ADU Program, homeowners must have owned and lived in the main property for a minimum of five years, maintain a credit score above 650, and have a debt-to-income ratio below 40 percent.
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The city of Pasadena, California has launched a new phase of its Pasadena Second Unit ADU Program, offering financial incentives to homeowners to build affordable rental units on their properties, as reported by the city.
Through this program, homeowners can access up to $225,000 in construction loans over three years to cover the design, permits, and construction of a new accessory dwelling unit (ADU) or “granny flat.”
The funds can also be used to upgrade unpermitted or illegal ADU conversions, such as garages or back houses, to meet building codes.
“Granny flats” are self-contained units on the same property as the main residence, offering affordable housing options for extended family members or tenants.
In the wake of recent wildfires in Los Angeles, the popularity of ADUs has increased as they provide additional housing solutions for affected residents.
Recent legal changes have also simplified the process of building and utilizing ADUs.
The construction loan program includes:
• 3-year term loan at 1 percent simple interest with deferred payments
• Loan secured by trust deed on the homeowner’s property
• 5-year affordability housing covenant for the ADU
• Property must have no more than one existing unit
• Main house must be owner-occupied
• Coverage of design, permits, and construction costs
• ADU must be rented exclusively to Pasadena rental assistance households for seven continuous years
To qualify, applicants must have owned and lived in the main property for at least five years, maintain a credit score above 650, and have a debt-to-income ratio below 40 percent. The combined loan-to-value ratio must be below 80 percent of the home’s value, and applicants cannot have an existing city loan.
All household members must be U.S. citizens or permanent residents.
Selected applicants will have 20 days to submit required loan documentation for lender verification and loan package preparation. The application deadline is Feb. 28 at 10 p.m.
Email Richelle Hammiel