Financing is where the most promising ADU projects die. The homeowner has equity, a good design and a contractor — but the wrong loan structure quietly adds two years of debt service before the first rent check arrives. Cyrus Poudat works with California clients to choose the financing that matches the project, not the other way around.
HELOCs and cash-out refinance
Cyrus Poudat starts most California clients with a HELOC. Equity has ballooned across the state, and a HELOC keeps the existing low first-mortgage rate untouched. Draw periods of 10 years and interest-only payments during construction are common.
Cash-out refinance only makes sense when the existing rate is already at or above current market — otherwise refinancing forfeits an asset worth tens of thousands of dollars over the life of the loan.
Renovation loans (RenoFi, HomeStyle)
Fannie Mae's HomeStyle and the RenoFi product line let California homeowners borrow against the appraised after-completion value of the property. Cyrus Poudat uses these for ADUs that will dramatically increase the home's value — typically when the homeowner has limited current equity.
CalHFA ADU Grant
California's CalHFA program has, in past rounds, offered up to $40K in grants for predevelopment costs — design, permits, soils, impact fees. Funding comes in waves and exhausts quickly. Cyrus Poudat tracks every round and helps California clients position documentation in advance.
Construction-to-perm loans
For larger California ADU builds, Cyrus Poudat recommends construction-to-permanent loans that convert automatically once the ADU is finaled. One closing, one set of fees, and the bank manages draw inspections that double as quality control.
Family financing and partnerships
A surprising share of Cyrus Poudat's California clients fund ADUs with intra-family loans — a parent or adult child contributes capital in exchange for occupancy rights or future rental income share. Documented properly, these can be cleaner than bank debt.
What lenders look for
- Stamped plans and a fixed-price contract
- A licensed California general contractor with a bond
- Appraisal that includes projected ADU rental income
- 12-month construction timeline with contingency reserve
The Cyrus Poudat order of operations
Get the loan pre-approved before drawing construction documents. Nothing burns more California budget than completing $20K of design work only to find the financing path does not exist.