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Sacramento Housing Blog

Sacramento Housing Blog

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Why Buying a Home is the Best Investment

Welcome to The Chris Kennedy Team Mortgage Blog

Honest, local, easy-to-understand mortgage guidance for buyers and homeowners across Sacramento, Placer, El Dorado, and Yolo Counties.

Hi — I'm Chris Kennedy. For years, I've helped first-time buyers, veterans, families upsizing into their forever homes, and seasoned investors navigate one of the biggest financial decisions of their lives: getting a mortgage in the greater Sacramento area.

This blog exists for one simple reason. Most mortgage advice online is generic, confusing, or written by people who've never closed a loan in Sacramento, Roseville, Folsom, El Dorado Hills, or Davis. I wanted to change that.

Every post on this site is written for you — the buyer, homeowner, or veteran trying to make sense of mortgages in a real Northern California market. Real numbers. Real neighborhoods. Real programs that actually work here.

What you'll find on this blog

Whether you're brand new to homebuying or you've owned for decades, you'll find practical, local guidance on every part of the mortgage process. The articles below cover:

For first-time buyers — How to qualify, how much you really need to put down, how to use CalHFA assistance, and how to stop waiting and start owning.

For veterans, active-duty service members, and surviving spouses — Everything you need to know about putting your VA home loan benefit to work in Sacramento, Roseville, Folsom, and beyond. Zero down. No PMI. The benefit you earned.

For move-up buyers and luxury buyers — Jumbo loan strategies for higher-priced markets like El Dorado Hills, Granite Bay, Serrano, and Bass Lake — including how to qualify, what reserves you'll need, and how to compete in luxury bidding wars.

For investors and wealth-builders — How to use FHA multi-family loans (yes, with just 3.5% down) to "house hack" your first investment property, plus the long-term wealth-building strategy that real estate quietly delivers better than almost any other investment.

For buyers in rural and semi-rural areas — A breakdown of USDA loans across Placer, El Dorado, and Yolo counties, where surprisingly large portions of the region qualify for $0-down financing.

For credit-building buyers — How FHA loans help buyers with imperfect credit get into Sacramento-area homes, plus practical credit improvement strategies that actually move the needle.

Why this blog is different

Three things set this content apart:

It's local. Every article names real neighborhoods, real Sacramento-area home prices, and real programs available in Sacramento, Placer, El Dorado, and Yolo counties — not vague national advice.

It's honest. I tell you what works, what doesn't, what the catches are, and when a loan isn't right for you. No high-pressure pitches. No fine print buried at the bottom.

It's actionable. Every post is built so that by the end, you know what to do next — whether that's running numbers, checking eligibility, or starting a conversation.

A little about me

I've spent my career helping Sacramento-area families navigate mortgages — through every kind of market, every kind of loan, and every kind of buyer situation. I've helped:

  • First-time buyers close with $0–$5,000 out of pocket using FHA + CalHFA strategies

  • Veterans buy in Sacramento, Roseville, Folsom, and El Dorado Hills with zero down

  • Move-up families step into luxury markets using jumbo financing

  • Investors build long-term wealth through smart house-hacking and refinance strategies

  • Self-employed borrowers other lenders turned away find creative solutions

My team and I serve the entire greater Sacramento region, including:

  • Sacramento County — Sacramento, Elk Grove, Folsom, Citrus Heights, Rancho Cordova, Antelope, Natomas

  • Placer County — Roseville, Rocklin, Lincoln, Auburn, Loomis, Granite Bay

  • El Dorado County — El Dorado Hills, Cameron Park, Placerville, Diamond Springs, Pollock Pines

  • Yolo County — Davis, Woodland, West Sacramento, Winters, Esparto

If you're buying anywhere in Northern California, there's a good chance we can help.

Start exploring

Scroll down to find articles tailored to your situation. If you're not sure where to begin, here are three good starting points:

Ready to talk?

Reading is great — but a 15-minute conversation will tell you more about what's possible for your specific situation than any article ever could. No pressure, no obligation, no salesy follow-up calls.

Chris Kennedy | The Chris Kennedy Team NMLS# 971546 Mortgage Lender serving Sacramento, Placer, El Dorado, and Yolo Counties www.thechriskennedyteam.com

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The Chris Kennedy Team specializes in FHA, VA, USDA, conventional, jumbo, and CalHFA loans throughout Sacramento, Roseville, Folsom, El Dorado Hills, Granite Bay, Davis, Woodland, Auburn, Lincoln, Rocklin, Cameron Park, and the surrounding Northern California region. Browse the articles below to learn more — or reach out anytime.

Sacramento ADU Financing: HELOC, Cash-Out Refi, and Construction Loans Explained

Accessory dwelling units are everywhere in Sacramento right now. Garage conversions in East Sacramento. Backyard cottages in Carmichael. Attached suites in Elk Grove new builds. California law has made them easier to build, and Sacramento homeowners are adding them to generate rental income, house family, and build equity.

The question most people get wrong is how to pay for one. Here are the real options, what they actually cost to access, and which financing path fits which situation.

 

How Much Does an ADU Cost in Sacramento?

A Sacramento ADU typically runs $150,000 to $320,000 all-in, depending on the type.

ADU Type

Typical Sacramento Cost Range

Notes

Garage conversion

$80,000 - $150,000

Lower cost; existing structure

Attached ADU addition

$120,000 - $200,000

Shares a wall with main home

Detached new build (small)

$180,000 - $280,000

Full construction on lot

Detached new build (large)

$250,000 - $350,000+

Higher-end finishes, size

 

Very few homeowners pay cash for these projects. Most finance them through equity-based products or roll them into a purchase.

ADU construction costs in Sacramento shift with labor and material markets. These ranges reflect 2025-2026 conditions and should be verified locally before publishing.

 

Option 1: Cash-Out Refinance

You refinance your existing mortgage for more than you owe and take the difference in cash to fund the build.

Best for:

Homeowners who currently have a rate at or above today's market, or who have enough equity to pull significant cash without dramatically increasing their payment.

The catch:

If you locked a 3% rate in 2021, refinancing today means trading that rate for a current market rate on your entire loan balance. Run the math carefully. The monthly payment increase on your primary mortgage may offset ADU rental income faster than you expect.

 

Option 2: HELOC (Home Equity Line of Credit)

A HELOC gives you a revolving line of credit against your home equity. You draw funds as you need them during the build, pay interest only on what you've drawn, and then repay over time.

Best for:

Homeowners with a low first mortgage rate they don't want to disturb. The HELOC sits as a second lien; your first mortgage stays as-is.

The catch:

HELOCs are typically variable rate. When rates are high, so is your HELOC payment. Also, HELOC sizing depends on your available equity. Lenders typically lend to a combined loan-to-value of 80-85% of your home's current value.

 

Option 3: Construction Loan

A standalone construction loan funds the build in stages (draws) as work is completed, then converts to a permanent loan or gets paid off at completion.

Best for:

Homeowners who don't have enough equity for a HELOC, or who want a loan structure specifically designed for the construction draw process.

The catch:

Construction loans carry higher rates than traditional mortgages and have more complex underwriting. You typically need a licensed contractor with plans, permits, and a detailed budget in place before the loan funds.

 

Option 4: Buy a Home with an ADU Already Built

You find a Sacramento home that already has a permitted ADU and finance the whole thing with one mortgage. The ADU rental income may help you qualify.

How qualifying income works:

If you buy a property with an existing, permitted ADU, lenders can count 75% of the market rent from the ADU unit toward your qualifying income. This can meaningfully expand what you qualify for.

Fannie Mae also has specific ADU guidelines that allow the ADU rental income to be counted even without a lease in place, as long as an appraisal supports the market rent.

Best for:

First-time buyers who want to get into a property and reduce their monthly cost, or investors who want rental income from day one without the construction headache.

 

Option 5: Renovation Loan (Buy + Build in One)

If you're buying a home and want to add an ADU, a renovation loan like the FHA 203(k) Standard or Fannie Mae HomeStyle lets you finance the purchase and construction together in one loan.

Best for:

Buyers purchasing a property that doesn't already have an ADU and want to build one as part of the purchase. One loan, one close, one monthly payment.

The catch:

Renovation loans have a longer and more complex approval process. The contractor must be approved. All work must be completed within the loan's build window. Not every property or project qualifies.

 

What About the CalHFA ADU Grant?

IMPORTANT: Publishing The CalHFA ADU Grant Program (which previously offered up to $40,000 for pre-development costs) was reported as fully allocated as of late 2023 with no confirmed relaunch date as of mid-2026. Sources on current availability conflict. Verify status directly at calhfa.ca.gov/adu before referencing this program as available to clients. If funding has been restored, note the income limits (80% AMI for Sacramento County) and that the grant covers pre-development soft costs, not hard construction costs.

 

Using ADU Rental Income to Qualify When You're Building, Not Buying

If you already own your home and you're building an ADU, you generally cannot count projected future rent from the ADU toward your qualifying income until the ADU is complete and a lease is in place. This is different from buying a property with an existing ADU.

The path around this: complete the build, get a signed lease, then refinance if needed. Or structure the financing (HELOC, construction loan) based on your existing income without counting the ADU.

 

How the ADU Affects Your Property Value

A permitted, finished ADU adds appraised value to your Sacramento property. The amount varies by size, quality, and neighborhood. In Sacramento markets where rental demand is strong, a well-built ADU can add $100,000 to $200,000 to appraised value in some cases.

Unpermitted ADUs are a different story. An unpermitted ADU can create complications for financing (lenders may not count its square footage or income), title issues, and insurance problems. If you're buying a property with an unpermitted ADU, talk to both your loan officer and your Realtor about the implications before making an offer.

 

Frequently Asked Questions

Q: Can I build an ADU on a rental property I own?

A: Yes, but financing options may be more limited. Cash-out refi and HELOC products are available for non-owner-occupied properties, though the equity requirements and rates are typically less favorable than on a primary residence.

 

Q: Will my property taxes go up if I build an ADU?

A: Yes, in most cases. California property taxes are reassessed when you add new construction. The ADU square footage will be reassessed at current market value. This is an important number to factor into your ROI calculation before starting the project.

 

Q: Can a veteran use a VA loan to buy a property with an ADU?

A: Yes. VA loans allow purchase of multi-unit properties up to four units, and a single-family home with a permitted ADU is treated as a single-family property. The VA appraiser will value the ADU as part of the property.

 

Q: How do I know if my Sacramento lot allows an ADU?

A: California state law allows ADUs on most single-family and multi-family lots, but local setback, size, height, and utility requirements vary by city and county. The City of Sacramento, City of Folsom, City of Roseville, and Sacramento County each have their own ADU ordinances. Check with the planning department before you commit to a project.

 

 

Ready to talk? Call (916) 794-0777 or visit thechriskennedyteam.com | NMLS #971546 | Serving Sacramento, Placer, El Dorado, and Yolo Counties. This article is for educational purposes only and is not a commitment to lend. Rates and program guidelines are subject to change. Contact a licensed loan officer for current terms and a personalized quote.

Chris KennedyComment