Small Homes, Big Impact

Building homes that more of our neighbors can afford is essential to all who live and work in our communities

The greater Bay Area is growing, but there simply aren’t enough homes for everyone. When homeowners add rental homes on their properties, we add viable housing options for people seeking to remain in our communities. This is where homeowners who feel powerless to take action against their friends, relatives and neighbors being pushed out can take action to help.

We believe Bay Area homeowners can help solve the housing crisis by building homes to rent in their own backyards. Small Homes, Big Impact offers educational workshops and financial assistance to homeowners wishing to build an accessory dwelling unit (ADU).

Join the Small Homes, Big Impact list to receive helpful information and program updates.

Notifications to Clients About No In-Person Meetings

Out of an abundance of caution, Housing Trust Silicon Valley will not be taking in-person meetings at this time. Following guidance by the County of Santa Clara Public Health Department, we are doing our part to help slow the spread of COVID-19 by minimizing close contact with people. We will be available to communicate with you via phone and email… read more here

How it Helps

Changes to California state law made it easier to build ADUs – also known as granny flats, in-law units or backyard cottages. Housing Trust’s Construction Loan pilot program bridges the gap between conventional financing options (such as a cash-out refinance, HELOC, borrowing from a retirement account, etc.) and the lack of secondary mortgage construction financing options.

The Housing Trust Construction loan program serves homeowners in Santa Clara County and the City of East Palo Alto. It consists of a three-year construction loan made as a second mortgage for a 36-month term for up to $200,000 to help cover hard construction costs.

Loan Terms

  • Maximum Loan Amount: Up to $200,000 or 97% of the property’s combined loan to value, whichever is lower
  • Eligible costs: Hard construction costs are eligible
  • Collateral: Second Mortgage / Deed of Trust
  • Maturity: 36-month term / 20-year amortization
  • Monthly Payments: Interest-only payments in 1st year, interest and principal payments in years 2-3 (first year of interest-only payments will be held back in escrow)
  • Must work with a Qualified Builder per Housing Trust requirements
  • Tenant income restriction up to 120% of Area Median Income. Borrower must lease the ADU at an affordable rate. Rent caps will be determined by the size of the ADU and will be updated annually.
Household size123
Unit SizeStudio1 Bedroom2 Bedroom
Rent Limit$1,982$2,266$2,549

California Department of Housing and Community Development, 80% of Area Median Income (updated as of June 1, 2020)

How to Apply

Applicants are required to attend at least one in-person workshop or two online webinars in order to qualify. You can find ADU events on Housing Trust’s Events Calendar.

    How to Apply

  1. Project and Financial Readiness: Can You Answer ‘Yes’ to the Following?

    Project Readiness

    Are you the owner-occupant of this home?

    Is your property located in Santa Clara County or East Palo Alto?

    Are you planning to have a detached ADU or garage conversion?

    Is your project shovel-ready with your permit issued?

    Do you have previous property management experience, or are you willing to take an online course for property management?

    Financial Readiness

    Do you hold title to the property?

    Do you have a first conventional loan on the property?

    Do you have a FICO score of 680 or higher?

    Is your property free of other leins, open HELOC’s, or encumbrances?

    Do you have sufficient income to make payments on both your first mortgage and this ADU loan?

    If the answer to each of these questions is “yes” please email to schedule an appointment with us.

  2. Phone Appointment and Completion of Eligibility Application

    Based on the information you provide on the ADU Construction Loan Interest Form, ADU staff will contact you to set up a phone appointment, at which time Housing Trust will walk you through the ADU Program Eligibility Application and the documentation you will be required to submit.

    After the phone appointment, we will review your complete ADU Program Eligibility Application to determine your project readiness and financial readiness.

  3. Complete ADU Construction Loan Application

    Program-eligible applicants will be provided with the ADU Construction Loan Application. ADU staff will review all submitted documentation and will notify you with a credit decision.

  4. Finalize Loan and Begin Construction

    ADU staff will review all documents with borrower over the phone prior to the signing appointment to answer any questions and review the construction, draw process, and program rental requirements.

    Construction must start within 90 days of loan closing and completed within 180 days. Within 60 days of construction completion, you must find an income-qualified tenant (see ‘loan terms’).

Additional Program Resources

ADU Program Eligibility Application

ADU Construction Loan Program Guidelines and Sample Documents

SHBI ADU Presentation – Module 1 – 6.4.2020

SHBI ADU Presentation – Module 2 – 6.10.2020

Program Partners

  • J.P. Morgan Chase
  • Wells Fargo
  • AARP
  • Sares Regis Foundation
  • Silicon Valley Community Foundation