How To Take Advantage Of The Bonus ADU | SD CCS

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How To Take Advantage Of The Bonus ADU | SD CCS

September 21, 2022

Ever since the housing laws in California have been relaxed to cope with the shortage of affordable rental housing in the state, property owners are taking advantage of and creating more and more accessory dwelling units (ADU).

As per the state laws, every single family-zoned property owner can build an ADU, and a junior ADU (JADU), converted from existing space in the house. Multi-family properties can have two freestanding ADUs and one created through the conversion of an existing space.

However, in the City of San Diego, it is also possible to build one or more ADUs under San Diego Housing Commission’s (SDHC) “Affordable ADU Bonus” program.

It allows homeowners to construct an additional unrestricted ADU for every affordable deed-restricted ADU.

What SDHC ADU Finance Program?

The SDHC’s ADU Finance Program is designed to help low-income homeowners in San Diego create one additional unrestricted ADU (one that can be rented out at market rates) for every deed-restricted ADU, those having affordability restrictions in place.

The borrowers can get up to $200,000 in the form of a construction-cum-permanent mortgage loan. SDHC is currently in talks with a partner lender bank to fund permanent first mortgage loans under the program; however, homeowners can also opt to refinance with a lender of their choice.

Under the program, SDHC also provides technical assistance to the participants to help them understand and process of building an ADU. They will be most likely to assist you with;

  • Pre-design and Permits
  • Vendor Selection
  • Project Execution
  • Finding Out Tenants
What SDHC ADU Finance Program


There is no limit in place for bonus ADUs located within Transit Priority Areas (TPAs), those located within one-half mile of a major existing or planned transit. They would only be physically limited by floor area ratio, lot coverage, and height requirements.

The properties located outside TPA, however, can have up to two bonus ADUs – one restricted ADU and one unrestricted. The restricted ADUs can be rented for 15 years to households with moderate income and for 10 years for low-income households. After that period, these ADUs can be rented out at market rates.

The affordability restriction for the properties located in a single-family neighborhood will be on the title in the second, while those in multifamily zoning will be on the title in the first lien position.

The homeowners are required to serve notices to their tenants about the end of the duration of affordability restrictions 36 months, 12 months, and 6 months before.

Design Requirements

An affordability-restricted ADU must be within 15 percent of the square footage of the market rate unit size. This unit must be comparable its market rate ADU counterpart in the number of bathrooms, amenities, and other features.

Tenant Eligibility

Before a tenant move into the deed-restricted ADU, the property owner is required to submit the income verification to SDHC to let them determine their eligibility.

Tenants are required to submit their income information on an annual basis to ensure the tenant’s continued eligibility under the affordable ADU program. There is an annual fee of $150 to verify the income of the tenants.

If the tenants’ income increase past a certain level, they will be asked to vacate by SDHC once it reaches the set threshold.

Final Words

Incentivizing the construction of affordable ADUs can not only help create affordable housing for low-income for moderate-income families but also enable the homeowners to generate wealth for themselves through rent and increase the value of their property.


Get Started on Your ADU Today

For years, SD CCS has been bringing the ADU dreams of property owners to life throughout San Diego.

From start to finish, we can effectively manage every aspect of your project to create an intelligently built and fully functional ADU that maximizes the value of your property and help you achieve the best possible return on investment.

Reach out to us today at (858) 727-5434 to start planning your ADU with one of our consultants.