The Investment

You probably don't need cash on hand.

Most California families build with equity they already have. We don't lend directly, but we work with two specialized ADU lenders, and most clients tap a HELOC, construction-to-permanent loan, or cash-out refi. Here are the four real paths, the monthly payment math, and an honest decision matrix.

4

real financing paths

$1,200

entry payment per month

3–6

weeks to close a HELOC

2

specialty ADU lenders

Entry payment = Four Fifty at $199K, $0 down, interest-only at a current average HELOC rate

Four Real Financing Paths

Most Common

HELOC

A Home Equity Line of Credit lets you borrow against the equity you already have. Flexible draw, interest-only payments during construction, only pay for what you use. Most of our clients pick this when they have a sub-5% primary mortgage they don't want to refinance.

  • • 7.5–9.5% APR (variable, 2026 ranges)
  • • 3–6 weeks to close
  • • Interest-only payments during build
  • • Interest may be tax-deductible if used for home improvement, ask your CPA

Construction-to-Permanent

A single loan that funds construction in stages, then automatically converts to a 30-year fixed mortgage. One closing, one rate lock. Often the lowest long-term monthly payment.

  • • ~7.25% fixed (2026 ranges, varies)
  • • 6–10 weeks to close
  • • Single closing, no later refinance needed
  • • 80% LTV maximum typical

Cash-Out Refinance

Refinance your existing mortgage for more than you owe; take the difference as cash. Works only if your existing rate is similar to current rates; bad idea if you locked sub-5% in 2020–2021.

  • • Same rate as a new primary mortgage
  • • 4–8 weeks to close
  • • Higher closing costs ($5K–$15K)
  • • Resets your amortization clock

Specialty ADU Lender

Mason Mac and SearchLight Lending underwrite differently: they look at the ADU's projected rental income as part of your debt-coverage ratio. Often approves clients turned down by traditional banks.

  • • Construction-to-perm products
  • • Rental income counted in qualification
  • • 4–6 weeks to close typical
  • • We make the email introduction

Not a Manufactured Home

Modular financing is normal financing.

Built to California code, on a permanent foundation.

Framework First homes are modular: built in our Salinas factory to the same state and local building code as a site-built home, then permanently affixed to a foundation. That makes them real property, the same legal category as the rest of your house, not a HUD-code manufactured or mobile home on a chassis.

Fannie Mae's own Selling Guide treats modular housing as ordinary real property eligible for standard financing, distinct from manufactured housing. Source: Fannie Mae Selling Guide B2-3-02.

No rate penalty, no chattel loan.

Because a modular ADU is real property, it qualifies for the same conventional mortgages, HELOCs, cash-out refinances, and construction loans as a site-built home, at site-built rates. Manufactured homes are often financed differently, commonly with chattel (personal property) loans that carry higher rates and fewer lender options.

Manufactured-home mortgages carry a loan-level price adjustment that modular homes, not being manufactured housing, don't. Source: Fannie Mae Selling Guide B5-2-04. Deeper comparison: prefab ADU vs. manufactured home →

Wondering about the CalHFA ADU Grant? Here's the honest, current status →

Monthly Payment Scenarios

What your monthly payment actually looks like.

Across eleven of our models, assuming $0 down and an interest-only payment at a current average home equity line of credit rate, since a HELOC is the most common way our clients finance. Add ~$200–$600/mo for property tax and insurance to get your all-in monthly cost. Repayment-period payments on a HELOC, or payments on a fully-amortizing construction or conventional loan, will be higher: see the four paths above or run your own numbers below.

Model Price (all-in)* Est. / mo, $0 Down
Four Fifty $199K $1,200
The 405 $239K $1,450
Five Five Five $279K $1,700
Six Sixty $309K $1,900
Six Sixty Duo $339K $2,050
Seven Forty-Nine $369K $2,250
Eight Eighty-Five Duo $399K $2,450
Nine Forty-Five Duo Plus $449K $2,750
Nine Forty-Five Trio Plus $479K $2,900
Twelve Hundred $549K $3,350
Twelve Hundred U $599K $3,650

*Includes a permitting budget, not final permit costs. Permits and property-specific site work (septic, retaining walls, etc.) vary by property and are confirmed in your feasibility study. Estimate for planning purposes only, not a loan offer, a rate quote, or financial advice, and Framework First is not a lender; your actual rate and payment depend on your lender and credit.

Run the ROI calculator to model your specific down payment, rate, and term, including HELOC and construction-loan scenarios.

Beyond The Monthly Payment

What building actually does for you, not just what it costs.

More equity to borrow against.

California homes with an ADU carried a median appraised value of $1,064,000 in 2023, versus $715,000 for comparable homes without one, according to Federal Housing Finance Agency data. That's on top of any rent the ADU itself brings in.

Reflects a value difference across homes with and without an ADU, not a guarantee your property gains that much. Your value depends on location, condition, and local market. Source: FHFA, 2025.

Keep more of what the rent brings in.

If you rent your ADU, the IRS lets you depreciate its construction cost over 27.5 years, a real deduction against your rental income. Loan interest, insurance, maintenance, and management fees are generally deductible too.

General tax information, not advice for your situation. California doesn't conform to every federal depreciation rule. Talk to your CPA. Source: IRS Publication 527.

Which Path is Right For You?

A decision matrix based on real client situations.

Your Situation Best Financing Path
Sub-5% existing mortgage + significant home equity HELOC: don't touch the existing mortgage
6%+ existing mortgage + significant equity Compare cash-out refi vs HELOC (refi may make sense)
Want a fixed payment forever, no surprises Construction-to-permanent loan
Borderline DTI or turned down at traditional banks Specialty ADU lender (Mason Mac / SearchLight)
Planning to rent the ADU for income Specialty ADU lender: they count projected rent
Lots of cash, prefer no debt Pay cash, maybe keep a small HELOC for tax-deductible interest

Our Lending Partners

Two lenders who actually understand ADUs.

No referral fees. Mason Mac and SearchLight Lending are resources we recommend because they specialize in ADU financing, not because we're compensated for the introduction. We receive no referral fee. You're free to use your own lender, your existing bank, pay cash, or ask us for other options if these two don't fit your situation. Our team will make the email introduction when you know which model fits your property.

Mason Mac

ADU-specialized lending. HELOC + construction-to-permanent products designed specifically for California ADUs. Underwrites based on combined LTV of main home + completed ADU.

Often approves clients turned down at big banks; their team understands ADU permits and timelines.

SearchLight Lending

Construction and renovation financing for California homeowners. Construction-to-perm products with rental-income consideration.

Strong for clients planning to rent the ADU. They factor projected rental income into qualification, often making the difference for borderline approvals.

What Lenders Look For

Qualification checklist for an ADU loan.

  1. 01

    Credit score 680+

    720+ for the best rates. Below 680, options narrow significantly.

  2. 02

    DTI under 43%

    Or up to 50% with rental-income consideration from a specialty lender.

  3. 03

    80% CLTV maximum

    Combined loan-to-value (main home + ADU) under 80% for most products.

  4. 04

    2+ years employment

    Stable W-2 income or 2 years of self-employment tax returns.

  5. 05

    2-6 months reserves

    Liquid savings equal to several months of total mortgage payments.

  6. 06

    Framework First contract

    Signed contract with all-inclusive price*, build timeline, and model: exactly what underwriters want documented.

*Includes a permitting budget, not final permit costs. Permits and property-specific site work (septic, retaining walls, etc.) vary by property and are confirmed in your feasibility study.

Financing FAQ

The questions that come up most.

Does Framework First lend directly?
No, we're a builder, not a lender. We partner with two California-licensed specialty ADU lenders (Mason Mac and SearchLight Lending) and can make the email introduction. You're also free to use your own lender, your existing bank, or pay cash.

What's the most common way clients pay for their ADU?
A HELOC against the existing primary home. Most California homeowners we work with have enough home equity to cover an ADU build through a Home Equity Line of Credit, which keeps their existing low-rate primary mortgage in place.

Do I need 20% down?
For a HELOC: no, it's a credit line against equity you already have. For a construction-to-permanent loan or cash-out refi: typically 20% down or 80% combined loan-to-value. Some specialized ADU lenders may go higher.

Will rental income from the ADU count toward my approval?
Traditional banks usually require 12+ months of documented rental history before counting it. Specialty ADU lenders (Mason Mac, SearchLight) factor projected rental income from comparable units into your debt-coverage ratio at application, which often makes the difference between approved and not.

What tax benefits come with renting my ADU?
If you rent it out, the IRS lets you depreciate the ADU's construction cost over 27.5 years, a real deduction against your rental income that doesn't cost you anything out of pocket each year. Loan interest, insurance, maintenance, management fees, and your ADU's share of property taxes are generally deductible against that same rental income too. This is general tax information, not advice for your situation, and California doesn't conform to every federal depreciation rule, so talk to your CPA about what applies to your loan and filing.

How long does the financing process take?
HELOC: typically 3 to 6 weeks from application to close. Construction-to-permanent: 6 to 10 weeks (more underwriting scrutiny). Specialty ADU lenders are usually in the 4 to 6 week range.

What if I can't qualify for the full build cost?
A few honest options: (1) pick a smaller model (Four Fifty Studio at $199K qualifies for far smaller financing than a 1,200 ft² model); (2) larger down payment to lower the loan amount; (3) co-borrower to bring additional income into qualification; (4) pause to improve credit or income. Your price locks in once you sign your build contract.

Can I use a 401(k) loan or other retirement funds?
Yes, many of our clients have done exactly that. A 401(k) loan to yourself can be a useful piece of the funding stack (the 'interest' you pay goes back into your own account). Talk to your CPA about the tax implications first.

What happens if interest rates change during my build?
HELOCs are variable, so your rate floats with Prime. If rates rise during construction, your interest-only payment rises with it. Construction-to-permanent loans typically lock the rate at closing (before construction begins), so the permanent-phase rate is fixed when the home is complete. We talk through this when you're picking financing.

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See Your Numbers

Let's find the right path for your property.

Tell us about your property below, and we'll follow up with your model shortlist, a monthly payment estimate, and an introduction to the right lender if you want one.

  • A shortlist of which models actually fit your lot
  • Honest flags on anything property-specific, like slope or septic
  • A clear next step, whether that is a factory tour or a feasibility study
  • No pressure, and no obligation

Once you submit, a real person on our team reviews your property and follows up within 1 to 2 business days to book your free 30-minute call. No call center, no drip campaign, just a conversation.

After we review your property, we'll invite you out to the factory, or send a member of our team to you, whichever fits your schedule better.

Building more than one? If you're a real estate developer or investor planning multiple units, let us know in the form. We offer better pricing at volume.

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