Living in the beautiful Napa Valley has many advantages – affordable housing, unfortunately, is not one of them. As all of us in the North Bay are painfully aware, the need for housing, especially for our workforce, has never been greater – ADU Construction Financing is here to help!
To address this urgent challenge, we’ve entered a first-of-its-kind partnership with Redwood Credit Union (RCU) aimed at accelerating the adoption of accessory dwelling units (ADUs) in Napa and Sonoma Counties. The result of our collaboration is an innovative ADU construction loan product that will enable more homeowners to borrow the capital they need to construct second units on their properties.
Redwood Credit Union, a mission-driven not-for-profit financial institution with 400,000 members in northern California, is managing all aspects of the ADU lending program. We are setting aside reserves which will be available to help defray losses that the credit union might incur under new underwriting standards which take future ADU rental income into account in ways that traditional loan products do not.
We think our new ADU loan product 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.
Two ideas, baked into the loan product itself, support our optimism:
First, the loan product allows borrowers to include a significant share of their expected ADU rental income during the underwriting process, which means a more favorable debt-to-income calculation, which generally means a bigger loan.
Second, it establishes a value for the completed ADU based on future rental cash flows instead of the cost of construction, which means a more favorable loan-to-value number, which also makes more capital available.
The ADU loan product is a key element of a multi-pronged strategy for supporting the development of ADUs in Napa and Sonoma counties that includes the provision of free technical assistance to local homeowners via the nonprofit Napa Sonoma ADU Center. A fiscally-sponsored project of Napa Valley Community Foundation with support from Community Foundation Sonoma County, the City and County of Napa and the City of Calistoga—as well as dozens of individual donors—the Napa Sonoma ADU Center has
LEARN MORE: To learn more about the new ADU loan product and free technical assistance available, join a FREE WEBINAR hosted by the Napa Sonoma ADU Center and Redwood Credit Union on Tuesday, March 29 at 6:00 pm. Register here: www.bit.ly/RCU-ADU-Webinar
For an individualized consultation about financing an ADU project, contact Sean Charter, Assistant Manager – Construction Lending at Redwood Credit Union at firstname.lastname@example.org or 707.576.5339.
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