PATH_01
HELOC
Home equity line of credit — most common path for owners with significant equity. Interest-only during draw, flexible draw schedule matches construction phases.
Best for: lots paid off or with 30%+ equity
CAPITAL_09 / How Clients Pay
Four ways to fund your ADU.
We don't sell loans. We've watched dozens of clients fund builds and we know which paths actually work in 2025 — and which to skip.
SPEC_01 / Side by Side
Rate, close time, equity required.
| Path | Rate (Q2 2026) | Close Time | Min Equity | Best Fit |
|---|---|---|---|---|
HELOC PATH_01 | Prime + 0.5–2% | 2–4 wk | 30%+ | Lots with significant equity |
Construction Loan PATH_02 | Prime + 1–3% | 6–10 wk | 20–25% | Ground-up DADUs |
Cash-Out Refi PATH_03 | Market + 0.25–0.75% | 5–8 wk | 20%+ | Resetting old high-rate notes |
Renovation Loan PATH_04 | Market + 0.5–1.5% | 8–12 wk | 5–15% | New purchases or low equity |
Indicative ranges only. Confirm rates and terms with a licensed lender — we're contractors, not loan officers.
SPEC_02 / In Depth
What each path actually feels like.
PATH_02
Construction Loan
Two-step or one-time-close construction-to-permanent loan. Funds disbursed against milestone draws. We provide all draw documentation.
Best for: ground-up DADUs without existing equity
PATH_03
Cash-Out Refinance
Refinance the primary mortgage and pull cash for the ADU build. Rate-sensitive; works when current rate is at or above market.
Best for: equity-rich owners willing to reset terms
PATH_04
Renovation Loan
FHA 203(k), Fannie HomeStyle, or Freddie CHOICE renovation loans bundle the ADU build into the mortgage. Slower to close but lower equity required.
Best for: lower-equity buyers or new purchases
FIELD_03 / Worked Example
What the math looks like on a real DADU.
- Build cost (DADU, 800 sqft)
- $425,000
- Permits + soft costs
- $28,000
- All-in basis
- $453,000
- Long-term rental (Seattle, 2BR)
- $2,650 / mo
- Annual gross income
- $31,800
- Operating expenses (taxes, ins, mgmt)
- −$7,400
- Net operating income
- $24,400
- Cash-on-cash yield (HELOC, 30% down)
- ≈ 8.6%
- Property value uplift (King County avg)
- +$310K – $440K
FIELD_04 / Lender Network
Need a lender intro?
We work with three local credit unions and two specialty construction lenders who actually understand ADU draws.