Napa Register: Napa Community Foundation partners with Redwood Credit Union to provide ADU loans

March 15, 2022  by Edward Booth


The Napa Valley Community Foundation announced Tuesday that it has partnered with Redwood Credit Union to create a construction loan program specifically for Accessory Dwelling Units, allowing homeowners greater access to capital needed to build the small, self-contained residence buildings on the lots of single-family homes.

“We think our collaboration with RCU will open the door to thousands of fixed-income, middle-income and lower-income homeowners in the North Bay, people who would not otherwise be able to afford to finance an ADU,” said NVCF President Terence Mulligan in a press release.

Mulligan said the loan allows borrowers to include a share of expected ADU rental income during the underwriting process, generally allowing for bigger loans. Additionally, he said, the value for the completed ADU is based on future rental cash flows instead of cost of construction, also allowing for larger loans.

The press release goes on to say that ADUs will play an important part in filling the local need for housing. In part, it says, that’s because ADUs tend to be rented at a discount compared to traditional apartments because they’re generally smaller and afford a bit less privacy.

The loan program is one element of a greater effort to support the development of ADUs in Napa and Sonoma Counties. The Napa Sonoma ADU Center provides technical assistance to homeowners, and has helped 335 homeowners figure out ADU projects since launching in May 2020, according to the press release.

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