Pasadena Launches Second Round of ADU Loan Program to Boost Affordable Housing

The City of Pasadena is launching a second round of its Accessory Dwelling Unit (ADU) loan program, offering homeowners up to $225,000 to build affordable rental units on their properties. The program details will be presented as a Presentation from the Department of Housing regarding Pasadena Second Unit ADU Loan Program meeting on Tuesday, February 11 at 6:30 p.m. at the Jackie Robinson Community Center.

The initiative provides comprehensive assistance for financing, designing, permitting and constructing new ADUs, also known as “granny flats,” in an effort to increase affordable housing stock. The program targets both new construction and converting existing unpermitted units to meet building codes, with program officials emphasizing they won’t refer unpermitted ADUs to code enforcement unless life safety threats exist.

Properties must be owner-occupied single-family homes for the past five years and maintain owner occupancy for the life of the City loan. ADUs are limited to 750 square feet. Condominiums, historical structures, and properties with existing ADUs or JADUs are not eligible.

Key program features include a three-year loan with 1% simple interest and deferred payments, plus an option to refinance with a silent City 0% loan up to $100,000. Homeowners must agree to rent units exclusively to Pasadena housing choice voucher holders for seven continuous years and accept a five-year affordability housing covenant.

Eligibility requirements include:

• Credit score above 650
• Debt-to-income ratio below 40%
• Combined mortgage and ADU loan under 80% of home value
• Home value cannot exceed $1,158,000 (95% of area median)
• Must be current on existing mortgage
• Cannot have existing loan with the City
• Must be U.S. citizen or permanent resident
• Property must be within Pasadena city limits

Applications will be accepted January 13 through February 28, 2025, via www.cityofpasadena.net/housing/second-unit-adu-program. Properties in Census Tracts 4609.00, 4615.01, 4621.00, 4622.02, 4623.01, 4623.02, and 4624.00 have no income restrictions, while others are limited to owners below 80% of area median income ($70,650). The program awards 10 points to properties outside restricted areas and below 80% AMI, and 5 points to properties with open citations for unpermitted ADUs.

Selected applicants have 20 days to submit required loan documentation and must work with a provided ADU Consultant through all phases including pre-design, permitting, bidding, and construction.

The public can participate in two ways: by submitting a speaker card before public comment at the in-person meeting at 1020 North Fair Oaks Avenue, or by emailing comments to jwhitmore@cityofpasadena.net at least 30 minutes before the meeting starts. Meeting materials are available at www.cityofpasadena.net/commissions/northwest-commission and all branch libraries. Language translation and disability-related accommodations are available with 72-hour advance notice.

The Northwest Commission meets on the second Tuesday of each month. For more information on the ADU program and application process, visit the City’s Housing Department website or contact Program Coordinator Randy Mabson.