Update: August 2022

Since originally posting this content, there have been further updates to the CalHFA grant and the special participants that can qualify you.

Namely, you can work with HPP CARES to qualify for the grant without ANY loan of any kind (and therefore without any kind of refinance).

Alternatively you can work with HPP CARES to work with any kind of lender. Full article pending, but you can watch this video for details:

Link to CalHFA list of organizations that can qualify you: https://www.calhfa.ca.gov/adu/index.htm

Link to HPP CARES ADU page: https://hppcares.org/adu/adu-grant.php

Original article from May 2022

There’s big news about the CalHFA ADU grant that offers up to $40,000 toward pre-construction costs to California homeowners.

The $40K grant requires you to get a loan from one of CalHFA’s pre-approved lenders - and up until now the loans have been very limiting. Homeowners often found they had to refinance their mortgage and that they’d lose their record-low interest rates. Not good!

The state has only had 18 grant reservations since January, despite the generosity of the grant!

But there’s a new lending product from one of the pre-approved lenders that will allow homeowners to get the $40,000 ADU grant, without ruining their current mortgage.

This article will tell you exactly how to inquire, and explain some details to make sure this is a good product for you to look at.

The story so far:

• There’s a $40k ADU grant from CalHFA

• But you have to get a loan from one of their pre-approved lenders to qualify

• And almost all of those loans require a refinance of your primary

• UNTIL NOW…

The new loan:

CalCon Mortgage (also known as One Trust) now offers a loan that takes a second position, so it doesn’t mess up the rate you have on your primary mortgage. It’s available all across the state of California

The loan details:

• There is a $200,000 minimum

• You need to have 25%-35% equity in your house

• The rate will be something like 6-8%

• No early payment penalty, but you have to get your CO before you can pay it off

• You need to be working with a licensed General Contractor with a fixed price contract - not doing owner builder, or cost plus.

The $200k minimum

You need to borrow $200,000 for this loan, even if you think your project is going to cost less than $200,000.

That might not make sense in your situation.

On the other hand, you can bundle the ADU construction with other home renovation projects, additions, remodels, etc. So if you want to upgrade your kitchen, add a bathroom, etc. you can build those costs into the same loan.

Also, remember that you can pay the loan back early if you don’t spend it all - so you could talk to the lender about how the funds will be released if the GC comes under budget or doesn’t finish the project.

The early payment

A lot of homeowners don’t need a loan - they just want the grant.

But the only way to get the grant is with a qualifying loan. The lender submits the paperwork to CalHFA for you and distributes the grant funds to reimburse you for pre-construction costs.

Those pre-construction costs can include non-recurring closing costs like the loan fees, and buying down interest.

There is no early payment penalty, but you cannot pay off the loan until you get a CO (certificate of occupancy) at the end of the project.

That means that you’re on the hook for interest for at least several months, and potentially over a year if your project takes a long time to get the C.O.

So you should budget some interest payments and make sure that you’re not spending so much that the grant no longer makes sense.

Contact:

CalCon Mortgage, Inc (AKA One Trust Home Loans)

Northern California Areas
Sean Germon
phone: 858.300.6241
email: sgermon@onetrusthomeloans.com

Southern California Areas
Patrick Germon
phone: 858.203.9467
email: pgermon@onetrusthomeloans.com