Innovative financial program offers a 0% interest loan to 20-30 San Joseans to build backyard homes
SAN JOSÉ, CA - Today, San José Mayor Sam Liccardo joined Steve Vallejos, President of prefabADU, and Mike Eggiman with 29th Street Capital, to announce the launch of the first and only 0% interest loan for accessory dwelling units (ADU) on the market. The San Jose Scaling Accessory Dwelling Unit (ADU) pilot program will provide 20-30 qualifying applicants a 0% interest loan for six months to finance 100% of the costs associated with permitting and building an ADU. PrefabADU also announced the goal of building 200 affordable by design backyard homes over the next year by taking advantage of their preapproved design plans to expedite the permitting process. These ADUs will add greatly needed housing stock to San Jose to help combat the housing crisis.
"We committed to make San Jose the nation's leader in helping homeowners deploy backyard homes to expand housing supply and affordability by inviting innovators from across the region to help us reduce costs, speed construction, and ease permitting challenges.” said San Jose Mayor Sam Liccardo. “We applaud the partnership between prefab ADU and 29th Street Capital to offer a critical financial innovation: 0% short-term loans that can help strapped homeowners reduce the cost of construction, while adding 200 affordable by design units to our housing stock.”
While ADUs continue to gain popularity, financing options have yet to catch up with the demand. Without a finished unit or proof of income from a tenant, many lenders view ADUs as risky investments. To address this challenge, 29th Street Capital is partnering with the City of San Jose and prefabADU to offer a 0% interest loan for 6 months to 20-30 customers as a bridge between building an ADU and accessing traditional loan options. After six months, interest rates will go up to 9.95% to encourage homeowners to refinance through a traditional lender for long term financing.
“Piloting ADU ideas is something we’ve done for 16 years,” said Steve Vallejos, President of prefabADU. “Today we take on financing, which is the next step in our evolution as an industry”
Led by prefabADU, the San Jose ADU Pilot program offers two preapproved standardized ADU plans that have been utilized throughout the Bay Area and can be installed in 90 days. These preapproved plans allow for smoother, more expedited planning, building, and permitting processes for site-specific ADUs within the city. All plans are smaller than 750 square feet, so homeowners won’t be required to pay impact fees.
Symbium Build, provides a free online tool that allows homeowners to verify an ADU works on their property, allowing them to virtually place one of the preapproved designs from prefabADU within their property lines.
To learn more about San Jose Scaling ADU’s pilot program, visit here.
To determine if a property pre-qualifies, owners can fill out a pre-qualification ADU form here.
To watch the press conference, visit here.
DISCLAIMER: The City of San Jose can neither offer any financial advice, nor recommend any particular firms or loans to residents.
About the City of San José
With more than one million residents, San José comprises the 10th largest city in the United States and one of its most diverse cities. San José’s transformation into a global innovation center in the heart of Silicon Valley has resulted in the world's greatest concentration of technology talent and development.