ADU Basics
CaRLA’s Quick Guide to Building Your Own ADU
California passed new statewide development standards for Accessory Dwelling Units (also known as ADUs, granny cottages, or casitas) that became effective in 2020. For most single-family homes, this means you will be able to add one or maybe two housing units to your property.
California needs as many casitas as we can get, and we want to make sure homeowners have the tools and the understanding to take advantage of this chance. Here is the chance for single-family homeowners to push back against the housing shortage.
Let’s go through the basics of how to get an ADU planned and designed, financed, and permitted.
NOTE: These basics are meant to give you a general overview of the ADU process and may not cover your specific situation. Be sure to consult your local zoning ordinances and work with contractors who are familiar with zoning and building codes. More information for what is allowed by state law can be found in the CA Department of Housing and Development Accessory Dwelling Unit Handbook.
Isometric View
Overhead View
Planning & Designing an ADU
In order to design an ADU on your property, you need to know the rules. The most important part of the rules to remember is that there are two sets of rules to choose from in most cities and counties. You can develop an ADU under the local city or county ordinance governing ADU permits. For most people, however, it will make more sense to get an ADU permit through the streamlined statewide exemption ADU program. These are types of ADUs that state law exempts from local zoning requirements.
Statewide Exemption ADUs
If you are planning to build an ADU that falls under any of the following categories, you should qualify for an exemption from local zoning requirements:
- A detached ADU that is 800 square feet or less, maintains setbacks of 4 feet from the side and rear lot lines, and conforms to a 16 foot height limit.
- An ADU or JADU that is converted from an existing structure on the property, is part of a proposed new single-family dwelling, or is constructed in the same physical dimensions of an existing structure and
- Has exterior access separate from the main home
- Maintains setbacks sufficient for fire safety
- If a JADU, it must be converted from within the walls of an existing primary home, and may include an owner-occupancy requirement
If your proposed ADU can fit into one of these categories, utilizing the statewide exemption program is probably the easiest path to building the ADU you want. Because these categories are exempt from local development regulations, you will not need to contend with design standards, landscaping standards, and any number of other local zoning standards that could add costs to your project.* Be sure to read about parking requirements below.
*Multifamily ADUs also fall under the statewide exemption program.
Following Local ADU Ordinances
The other path available to an ADU permit is to propose an ADU that complies with the requirements of your city’s local ordinance. Most cities have either enacted local ordinances, or are in the process of doing so. These ordinances must comply with the state minimum standards, which means that they are not allowed to place certain development restrictions on ADUs. HCD reviews local ordinances to determine whether they comply with state standards, and CaRLA monitors them as well.
If you are seeking to build an ADU under the local ordinance, it is probably because you are seeking to build a project that isn’t covered by the exemption ADU program. Since local ordinance ADUs are subjected to more requirements, they will be harder to permit and more expensive to design. You may opt for this path if you want to build an ADU that:
- Is a detached ADU larger than 800 square feet. Exemption ADUs are capped at 800 square feet, but the local ordinance must allow for up to 1000 square feet for a 2 bedroom ADU,
- Is an attached ADU that involves an expansion of the existing single family home of over 150 square feet,
- Is a second story, detached ADU that exceeds the 16 foot height limit for exemption ADUs, such as an ADU above a detached garage.
In each of these cases, the local ordinance may allow for the flexibility you need to achieve your desired project. Keep in mind that the project will be subjected to more requirements. For example, some cities require that ADUs under the local ordinance must match the architectural style of the primary home. This requirement can make it difficult or impossible to develop a prefabricated ADU.
Sidebar: Parking Requirements
It is advised that you look into parking requirements for your own circumstance. Generally according to state law, parking for ADUs shall not exceed one parking space per unit or bedroom (whichever is less) and these spaces may be provided as tandem parking on a driveway or in setback areas. Guest parking spaces shall not be required for ADUs under any circumstances.
In certain circumstances you may not have to provide any additional parking. State law prohibits local governments from requiring additional parking when the proposed ADU is:
- located within one-half mile walking distance of public transit,
- located within an architecturally and historically significant historic district,
- part of the proposed or existing primary residence or an accessory structure,
- in an area where on-street parking permits are required but not offered to the occupant of the accessory dwelling unit, or
- located within one block of a car-share vehicle.
These parking spaces can be located on the lot in setback areas, and need not be covered.
Lastly, if you convert an existing garage space to an ADU, the parking from the garage does not need to be replaced, and no parking can be required for the new ADU because it is being converted from an existing structure.
Financing an ADU
Building a new ADU can cost on average between $75,000 and $400,000, depending on where you live and what design choices you make along the way. Regardless of the cost of your project overall, you will need to access capital to finance your ADU development. Here are some of the main options available:
Cash
If you have enough cash available to pay for the whole project, go for it!
Financing with Your Current Home Equity
Under either option below, homeowners can access cash by refinancing their property when they have built up equity. The amount you can get from these financing options depends on the equity available in your property (current value minus any outstanding debt).
Home Equity Line of Credit (HELOC)
If you have equity built up in your home, this may be a good option. Banks will typically allow you to borrow up to 85 percent of the equity available in your property (value of property minus any outstanding debt tied to the property). Terms for HELOCs usually involve variable interest rates but have more repayment flexibility and faster closing.
Cash-out Refinancing
Under this option, you replace your existing mortgage with an entirely new one based on the current value of the property. Again, if that current value exceeds the existing debt, you can get a payment for the difference (up to 90% of the current value). This option usually provides for fixed interest rates, but carries a longer processing and closing costs.
Loans for Construction
Banks also offer a variety of loan products that finance construction. These loans include higher interest rates and shorter repayment periods, but do not require equity in your home for collateral.
Construction Loans
Standard construction loans usually have one year repayment periods and variable interest rates.
ADU Construction Loans
Some banks are starting to develop specialized construction loans for ADUs. Ask your local bank about availability.
Alternative Financing
There are a variety of companies offering ADU financing options that give the developer an interest in the future rents of the ADU. Under this option the company would build and manage the ADU, and collect rents on it for a fixed period of time. In exchange the property owner gets an ADU on their property, but would not receive rent from the new unit until the financing period is over. If this option sounds appealing, look to see whether it is available in your area and carefully consider the terms. This option may be less tightly regulated than traditional loan offerings.
Save Money with Prefabricated Options
One of the biggest ways to save is to choose a prefabricated ADU option. This involves simply pouring a foundation for the new ADU and having a pre-made home trucked to your property and dropped onto the foundation. Choosing a prefabricated ADU could cut tens of thousands off the costs of the ADU overall. There are more and more producers of prefabricated homes starting business now that interest in ADU development is growing, so choose wisely. Keep overall costs in mind when choosing among design options in the next section.
Permitting
The process for permitting should be quick and easy regardless of what type of ADU you choose to develop, but there may be some differences in the overall process. ADUs under the exemption program are not subject to any development standards if they qualify. ADUs under the local ordinance, however, may be subject to additional local requirements.
Permitting an Exemption ADU
If you choose to develop an ADU that fits under one of the exemption categories, it will provide the quickest and simplest route to approving your new ADU. Exemption ADUs are subject to building and energy codes, so make sure you hire a designer who knows all of these rules well. Outside of these rules, however, the rest of the design choices are up to you. Once you have plans ready to submit, consult your local planning and building departments to determine how to apply. State law limits consideration of permits to 60 days, so if you experience delays be sure to remind your local department of this requirement.
Permitting under Local ADU Ordinances
Applying for an ADU under the local ordinance should also be a simple process. Because the local zoning ordinance will likely have more detailed development standards, however, you may need to go through several rounds of comments with the local planning department. Design standards that apply to these ADUs could mean that local regulations dictate your choices in materials, windows, or other aspects of the ADU. If you choose to permit an ADU under the local ordinance, we suggest consulting with your local planning department first so that you can incorporate all of these requirements into your design. While the same 60 day time limitation applies to consideration of ADU permits under the local ordinance, the entire process may be longer due to pre-application consultation and comments on design.
NOTE: These basics are meant to give you a general overview of the ADU process and may not cover your specific situation. Be sure to consult your local zoning ordinances and work with contractors who are familiar with zoning and building codes. More information for what is allowed by state law can be found in the CA Department of Housing and Development Accessory Dwelling Unit Handbook.