---
title: A Great New Option for Financing Your Accessory Dwelling Unit
description: Learn about the advantages of a home renovation loan to finance your backyard home / accessory dwelling unit. Our preferred lenders specialize in financing ADUs to get you the best terms.
---

[Accessory Dwelling Unit Blog ](https://www.modative.com/adu-blog)

# [A Great New Option for Financing Your Accessory Dwelling Unit](https://www.modative.com/adu-blog/a-great-new-option-for-financing-your-accessory-dwelling-unit-a-d-u-finance)

 Written by [Derek Leavitt](https://www.modative.com/adu-blog/author/derek-leavitt) | May 30, 2018 7:17:32 PM

 

If you don’t have the cash to build an ADU or you don’t have enough equity in your home to do a Home Equity Line of Credit, a Renovation Loan might be the best way to finance your ADU.

 A Home Equity Line of Credit “HELOC” has limitations.   If your home is currently worth $500,000 and you owe $350,000 on your current mortgage. Most banks will lend up to 80% of the current value, or $400,000. This leaves only $50,000 available to build the ADU.

A great alternative to this is a renovation loan. Renovation loan appraisals are based on the “As-Completed” value of the home. So if the home will be worth $550,000 once the ADU is complete, the renovation loan will lend up to 95% of the “As-Completed” value, or $522,500. This gives you $172,500 available to build the ADU.

Knowing the high price of real estate in Los Angeles, this opens up a lot of opportunities to finance much or all of the cost of your backyard home.

Contact us to learn more about our financing partners offering these loans for ADUs.

[View full post](https://www.modative.com/adu-blog/a-great-new-option-for-financing-your-accessory-dwelling-unit-a-d-u-finance)

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