City of Pasadena Expands Affordable Housing Options Through New ADU Construction Loan Program

The City of Pasadena is helping homeowners build more affordable housing in their own backyards through the Pasadena Second Unit ADU Program. The program provides up to $225,000 in 1% simple-interest construction financing, paired with full project management support, to help qualifying Pasadena homeowners construct a new accessory dwelling unit (ADU) on their property.

The program is funded through the City’s Permanent Local Housing Allocation (PLHA) and California’s CalHome Program, administered by the Department of Housing and Community Development (HCD). This round of funding will support the development of up to 25 new ADUs across Pasadena, creating long-term affordable rental opportunities for Pasadena Housing Choice Voucher holders.

Eligible homeowners can receive:

• Up to $225,000 construction loan at 1% simple interest
• No payments for 3 years during construction and lease-up
• Zero out-of-pocket design, permitting, or construction costs
• A dedicated construction project manager to oversee design, permitting, bidding, and construction
• Support connecting with qualified consultants and licensed contractors
• Guaranteed rental income by leasing the completed ADU to a Pasadena Housing Choice Voucher tenant for seven years

This program removes the barriers that usually make ADU construction overwhelming or financially out of reach. Homeowners can build wealth, increase the value of their property, and help create stable, affordable housing for Pasadena residents.

Applications are currently being accepted, with priority given to income-eligible homeowners earning below 80% of the Area Median Income (AMI).

More information, the ADU Program Handbook, and application instructions are available at: CityOfPasadena.net/Housing/Second-Unit-Adu-Program/