Oakland’s ADU Loan Program helps homeowners create ADUs
The City of Oakland’s ADU Loan Program provides a low interest loan designed to help homeowners in East and West Oakland turn their illegal, backyard secondary dwelling units into legally permitted ADUS – or accessory dwelling units.
While backyard-built studios, cottages and in-law units have been key to helping to address the lack of affordable housing options in Oakland, many of these secondary backyard units were built outside of the required permitting process.
A city report published in 2020 states that homeowners are deterred from converting existing units into permitted ADUs because of the complicated city procedures and high cost of constructions – especially in low rent areas like East Oakland where it would be more difficult to recover sunk building costs.
Plus, homeowners have found that the permitting status has not adversely affected their ability to rent out their secondary units, further disincentivizing homeowners to go through the unit conversion process.
Oakland’s ADU Loan Program is designed to help change that.
Participants receive a deferred payment 30-year loan of up to $100,000, plus guidance on the design, bidding, permitting, and construction processes.
Who’s is qualified for Oakland’s ADU loan program?
Here are the basic qualifications for those interested applicants:
- An owner-occupied single-family residence in an Oakland “Opportunity Zone” located in West Oakland, along the Interstate 880 Corridor, and in parts of East Oakland.
- Household income must be at 80% or below area median of Alameda County. This means $87,700 for a two-person household and $109,600 for a 4-person household
- Eligibility must be confirmed by February 2023 and all construction must be complete by Spring 2024.
For more information on eligibility qualifications, visit the City of Oakland’s website.
HOW TO APPLY
There is implemented a multi-step application process for Oakland’s ADU Loan Program. Learn more about the process summary on the City of Oakland website.
What is an Accessory Dwelling Unit?
An ADU, or accessory dwelling unit, is a secondary residential unit like a backyard cottage, guest house or add-on studios that shares a building lot of a larger primary home. These units cannot be bought or sold separately.
Instead they are typically used to provide additional income to homeowners through rent. They as they often are equipped with their have their own kitchen, living area and importantly a separate entrance. In some instances, the ADU can be attached to the main house or garage or built as a standalone unit generally using the electrical energy and water line connection of the main home.
Benefits of an ADU:
- Extra income if used as a rental property
- Typically adds value to the property
- Adds more livable space if used as a workshop or guest suite.
Cons of ADUs:
- Might take up space for any future plans of expansion for the main home (garage, storage shed, etc.)
- Maintenance cost if used as a rental property
- May increase property tax and utilities that will add up to homeowners’ monthly expense
- Design, building and permitting costs
Learn more about Oakland housing hacks.
About the Author
Montana Gabrielle Hooks is a SF Bay Area Realtor in the East Bay. Local entrepreneurship, playing bass guitar and singing live karaoke are a few of her favorite things. She is the 2023 Marketing Chair for the Young Realtists Division – Oakland Board of Directors, and is a member of the Associated Real Property Brokers. Follow her on Instagram or learn more about her on her website.
