Accessory Dwelling Units (ADUs) are no longer just backyard cottages—they’re powerful financial tools.
In California alone, over 30,000 ADU permits were issued in 2024, and national interest is surging as homeowners seek inflation-resistant assets, flexible housing solutions, and passive income streams.
But while demand soars, many borrowers—especially the self-employed, real estate investors, and business owners—still hit roadblocks with conventional lenders who rely on outdated underwriting models.
Enter Capital Direct Funding (CDF): a lender built for today’s complex borrowers and tomorrow’s housing needs. Our ADU loan process isn’t just fast—it’s designed for real life.
Here’s how we make financing predictable, transparent, and personalized:
Step 1 – Strategic Consultation
We don’t just take applications—we start with a strategy session.
Our team (many with real estate or construction backgrounds) reviews your site, zoning allowances (e.g., SB-9, local ADU ordinances), and financial profile.
For entrepreneurs or gig-economy earners, we focus on cash flow capacity, not just tax returns—accepting 12–24 months of bank statements, business revenue trends, or even rental portfolio performance as qualifying criteria.
Step 2 – Simplified, Smart Application
Forget stacks of documents. Our digital portal guides you through a lean application: property address, contractor info (licensed & insured), scope of work, and a realistic budget—including soft costs like design, permits, and impact fees.
We even help estimate ARV using local comps and recent ADU sales—no guesswork.
Step 3 – Approval Anchored in Future Value
CDF underwrites to the After-Repair Value (ARV), not the status quo. A $900K home with a $250K ADU might appraise at $1.3M post-build—unlocking up to 80% LTV on the future value.
Approvals are issued in 2–3 business days, with clear terms: interest-only during construction, fixed rates post-conversion, and no prepayment penalties.
Step 4 – Controlled, Transparent Draw Schedule
Funds release in 4–6 milestone-based draws (e.g., foundation, framing, MEP rough-in, insulation/drywall, final finish).
Each requires third-party inspection and photo verification—protecting both borrower and lender.
Delays? We offer flexible timeline extensions (up to 60 days) at no cost, because construction rarely goes exactly to plan.
Step 5 – One-Time Close to Permanent Financing
When your ADU is complete and passes final inspection, your construction loan automatically converts to a 30-year fixed mortgage—same rate, same team, no re-underwriting.
This eliminates refinance risk, market timing stress, and duplicate closing costs. For investors, we also offer portfolio-friendly terms and blanket loan options.
Why Borrowers Choose CDF in 2025
- Speed: From consult to first draw in 7–10 days (vs. 60+ with banks)
- Flexibility: No DTI hurdles for strong-asset borrowers
- Transparency: All fees disclosed upfront—no “junk” charges
- Support: Dedicated loan concierge from Day 1 to keys-in-hand
Whether you're adding a mother-in-law suite for aging parents, building a rental unit to offset mortgage costs, or scaling a small ADU development portfolio—CDF gives you the capital and confidence to build forward.
Let’s get your ADU funded—faster than you thought possible.
Call us at (626) 796-1680 or explore options: capitaldf.com
Sources:
Capital Direct Funding – ADU Loan Application Process
Navigating the New Frontier: ADU Loan Market Trends (Urban Land Institute, 2025) • CA HCD ADU Permit Dashboard (Q1 2025 Update)