Private Money ADU Loans
Hard Money in Los Angeles
Capital Direct Funding is a direct private money lender for ADU construction in Los Angeles and Orange County. These are hard-money, business-purpose construction loans — 75–85% of project cost, rates 9.5–11%, $60,000–$300,000 per unit, 12–18 months, with milestone draws. Not a HELOC, not a CalHFA grant, and not a 30-year consumer mortgage.
Check Your ADU Eligibility
Built for ADU Construction
We specialize in the unique financing needs of ADU projects — from garage conversions to detached new builds.
75–85% Loan-to-Cost
Maximize your leverage. We fund up to 85% of total project cost including land value, permitting, and construction — so you keep more cash for reserves.
Fast Underwriting
Our streamlined 12-point forensic underwriting process means faster decisions. No weeks of back-and-forth — get clarity quickly so your project stays on schedule.
Milestone-Based Draws
Funding releases tied to construction milestones — foundation, framing, MEP, finishes. You only pay interest on what’s drawn, keeping carrying costs low.
ADU Specialists
We understand zoning (SB 9, SB 13, AB 68), lot utilization ratios, and ADU-specific permitting across every LA and OC jurisdiction. We speak your language.
Construction-to-Perm
Seamless transition from your construction loan to permanent financing. DSCR, conventional refi, or sale exit — we map your takeout from day one.
Interest Reserve Built In
Your interest reserve is capitalized into the loan — no monthly payments from your pocket during construction. Focus on building, not cash flow juggling.
How It Works
Four clear steps from pre-qualification to your first construction draw. No surprises.
Pre-Qualify
Submit your property details and project plan. We respond within 24 hours with your eligibility and estimated terms.
Underwriting
Our team verifies property value, zoning compliance, contractor bids, and construction timeline via our 12-point forensic checklist.
Approval & Close
Receive your commitment letter, finalize docs, and close. Interest reserve and first draw funded at closing.
Build & Draw
Construction begins. Funds released at each milestone — foundation, framing, MEP, finish. We inspect and wire within 48 hours.
ADU Construction Loan Parameters
Clear terms, no hidden fees. Here's exactly what to expect.
| Parameter | Standard Terms |
|---|---|
| Loan-to-Cost (LTC) | 75 – 85% |
| Interest Rate | 9.5 – 11.0% (Interest-Only) |
| Origination Fee | 1.5 – 2.0 points |
| Loan Term | 12 – 18 months (+3–4 mo buffer) |
| Draw Schedule | Milestone-based |
| Minimum Equity | 15 – 25% (cash + land value) |
| Interest Reserve | Required, capitalized in loan |
| Loan Range | $60K – $300K per ADU |
Your Property Could Generate $1,200–$1,800/mo
A well-built ADU in LA or Orange County adds significant rental income and property value. At a 5.5% cap rate, a single ADU can add $218K–$327K to your property's value.
- Detached ADU: 600–1,200 SF — $150K–$300K construction
- Garage Conversion: 300–500 SF — $60K–$100K construction
- Attached ADU: 400–800 SF — $120K–$200K construction
- Yield on cost: 8.0% – 12.0% annually
- Perm take-out via DSCR or conventional refi
When private money funds the ADU
Most “ADU financing” pages describe grants, HELOCs, and builder packages. Those are real paths. They are not this loan.
| Path | Pays for | Fits | Is not |
|---|---|---|---|
| CalHFA ADU grant | Pre-development only (plans, permits, soils, fees) when a round is open | Income-eligible owner-occupants, if funding exists | The vertical build. CalHFA’s last published round was fully allocated Dec 28, 2023 |
| HELOC / cash-out / Non-QM | Existing home equity as cash or a credit line | Owner-occupants with equity, DTI, and a bank or mortgage broker | A construction draw facility when you just bought or the bank said no |
| Habitat / NHS / factory programs | 0% or subsidized money, or a factory-built package | Income-qualified homeowners | An investor or rental ADU on a timeline |
| CDF private money | 75–85% of ADU project cost, released on milestones | Business-purpose rental / investment ADUs in LA and Orange County | A 30-year consumer mortgage or a government grant |
Questions people actually ask
Can I use a private money or hard money loan for an ADU in Los Angeles?
Yes. Capital Direct Funding funds ADU construction as a private money / hard money loan — a short-term, asset-based, business-purpose construction facility secured by California real estate. Published terms: 75–85% loan-to-cost, 9.5–11% interest-only, $60,000–$300,000 per unit, 12–18 months, milestone draws. Detached ADUs, garage conversions, attached ADUs, and junior ADUs (JADUs) in Los Angeles and Orange County.
What are private money ADU financing requirements in Los Angeles?
The loan is business-purpose (typically a rental or investment ADU), secured by California real estate. We review the property, project type, contractor or bid, use (rent vs occupy), and timeline. Published parameters: 75–85% of cost, $60,000–$300,000 per unit, 12–18 month term, 9.5–11%, 1.5–2 origination points, capitalized interest reserve, and milestone-based draws. This is not a consumer mortgage on an owner-occupied family unit and it is not a “no equity required” unsecured loan.
I just bought and have little equity. Can I still finance an ADU?
A HELOC usually will not work if there is no equity yet. A private money ADU loan is underwritten to loan-to-cost on the project, not to a long-term consumer DTI. That does not mean zero cash: published terms require 15–25% equity in the project (cash plus land value). We look at the specific lot and budget; we do not promise “no money down.”
What is the CalHFA ADU Grant Program status in 2026?
CalHFA’s own program page states the latest ADU Grant round was fully allocated on December 28, 2023, and that anyone offering to get you an ADU grant is a financial scam. When funded, the grant reimbursed up to $40,000 of pre-development and non-recurring closing costs — site prep, architectural plans, permits, soils, impact fees, surveys — not vertical construction. Confirm current status at calhfa.ca.gov/adu. CDF does not administer CalHFA grants. We finance the build as private money.
How is this different from a HELOC or a bank construction loan?
A HELOC is consumer credit against existing equity, usually on an owner-occupied home, underwritten to income and DTI. Bank construction loans are slower and often require full documentation. CDF’s ADU program is a 12–18 month private construction loan with milestone draws and a planned takeout (DSCR refinance, sale, or conventional) after completion. If a HELOC fits, use it. If the bank will not fund the build, that is this lane.
What if I need a regular mortgage or HomeStyle loan for an owner-occupied ADU?
That is not this page. Owner-occupied HomeStyle, FHA 203(k), cash-out, and HELOC paths are brokered through Elite Fundings / Francisco Williams (franciscowilliams.com/adu-financing). CDF is private money construction for business-purpose ADUs.
Does CDF list ADUs for rent in Los Angeles?
No. We finance construction of rental ADUs. We are not a rental listing service and we do not publish an inventory of ADUs for rent.
What Our Borrowers Say
Homeowners and investors across Southern California trust CDF for ADU construction financing.
“CDF funded our garage conversion in Fontana in under 3 weeks. The milestone draw process was seamless — our contractor loved it. Now we’re collecting $1,450/mo in rent.”
Roberto M.
Homeowner, Fontana CA
“I built a detached ADU on my property in Anaheim. CDF structured the loan so I had zero out-of-pocket during construction with the interest reserve. The property appraised $240K higher after.”
Linda T.
Investor, Anaheim CA
“As a contractor, I recommend CDF to my clients. Their draw process is the fastest in the business — 48 hours from inspection to wire. It keeps my projects on schedule and my subs paid.”
James G.
Licensed GC, Los Angeles CA
Ready to Build Your ADU?
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