To receive the loan, interested homeowners will be randomly selected from the standby list and given the opportunity to complete a loan application. If the application is successful (see “How to Apply” for more details), the homeowner will receive a letter of commitment from the Trust, dependent on a timely progression through the permitting and construction processes. Trust funds will be paid in after all other funding is used and the loan will be secured with a loan agreement, promissory note, and regulatory agreement that creates an affordability covenant on the property.

When ready to lease your new ADU, you need to find a qualified very low-income tenant whose household income is at or below the 50% Area Median Income level (AMI). The program provides funding for working with a trained property manager to assist you in finding and qualifying a tenant. Rents will be restricted to an amount that is affordable to the renter and adjusted annually. Forgiveness and interest will accrue during this period, but no payments are required until a “repayment event” occurs.

The loan, minus any forgiveness and plus any accrued interest, will be due as a lump-sum payment if you decide to leave the program, if there is a change to the title of your home, at the end of the 20-year term, or other repayment events. You may continue to hold the loan at a higher interest rate after the ten-year affordability period has ended, up until the entire loan term of 20 years.

See “Key Loan Terms” for more details on the variable interest rates, forgiveness, and other financial considerations.

If you need additional funding to cover any remaining construction costs, Orange County’s Credit Union has created a special home-equity loan product for homeowners participating in the Affordable ADU Loan Program. You can find more information on the program in their brochure.

You may use any lender or other source of funds you choose and are not obligated to use Orange County’s Credit Union to participate in this program.

1. Sign up for the Interest Standby List on the OCHFT’s website (https://ochft.org/affordable-adu-loan-program)

2. Groups of interested homeowners will be contacted on a rolling basis to invite them to complete the application for the loan. Selection will be made via weighted lottery, using the following criteria to meet program goals:

   1. Mobility Accessible ADUs (first priority)

   2. Even geographic distribution throughout the County

   3. Preference to those ADUs who have already started construction

3. Complete the application via web form

4. Applications will be reviewed, and loan commitment letters issued on a first-come, first-served basis. When you receive the invitation to complete an application, you should respond as soon as you can with the required information.
   

   An invitation to apply for a loan is not a guarantee that funding will still be available at the time an application is completed.

In addition to information about your finances, location, and ADU, you will need to supply the following documents in the application:

1. Feasibility Assessment of the ADU and site

2. Most recent loan statements on any debt on the property (mortgage, home equity loans, etc.)

3. A budget or cost estimate from a builder

4. Proof of all additional funding required to meet the budget

5. Design plan (preliminary or final are acceptable)

Feasibility assessments must verify that an ADU can be constructed and will meet local jurisdiction standards for approval

Homeowners are encouraged to register on the interest list at any stage in the development of their ADU. However, the application includes documents that must come from a builder or ADU consultant. We recommend that you start conversations with these professionals in order to be best prepared for the application if you are invited to apply.

To be eligible for the loan, homeowners must meet the following criteria:

1. Be building a new ADU at their primary residence, which is in a Trust member city or unincorporated area. Legalizing existing ADUs and ADUs that are already approved for occupancy aren’t eligible.

2. Be building a legal and feasible ADU (including lot maximums, zoning, permitting, tree removal, parking, and any other requirements)

3. One Affordable ADU Loan Program per property.

4. Have commitments for the remainder of the funds needed for construction but no more than two other loans on the property (including an original mortgage) and a loan-to-value that is no higher than 90% for all loans (including the Trust’s ADU loan)

5. Be working with an experienced ADU professional (ADU consultant, builder with previous ADU experience, or another qualified professional), and all contractors must be licensed in California. The contractor needs to provide liability insurance and worker’s compensation.
   

To be eligible to receive the $5,000 additional loan amount for building a mobility-accessible ADU, you will need to meet the following standards.

1. Exterior and interior accessible path for mobility-aided persons from the property entrance through to every interior room. There may be stairs or other non-accessible barriers as long as an accessible path exists in those rooms and areas.

2. Doorways are at least 32 inches wide, and all hallways are at least 36 inches wide.

3. At least one bath, on the entry-level, with a clear space area of at least 60 inches in diameter, and must have reinforced walls for grab bars to use in entering and exiting the tub/shower and around the toilet. Grab bars do not need to be installed.

4. A roll-in, no-threshold, or low-threshold bathing facility in an entry-level bathroom.

Certification that the design meets these requirements will be the plan designer's responsibility. Plans that are certificated as ADA-compliant designs will also qualify for the forgivable loan.

A few notes and tips on this process:

There is a strong incentive to sign up early to the interest list:

1. Earlier sign-ups will have more chances of being selected to apply through the recurring lotteries.

2. Those selected earlier in the process will have more time to complete the application before the funds are likely to be exhausted.

However, those who can complete the application quickly, even if invited later, will have a high chance of successfully receiving a loan commitment.

If you decide that you would like to build a mobility-accessible ADU or have already started construction, please contact our team so we can update your information on the interest list. ADU@ochft.org