Paying for Your ADU or Remodel

Imagine if your home helped pay for itself.

With housing affordability skyrocketing nationwide, homeowners are turning to renovation options like Accessory Dwelling Units (ADUs), home energy efficiency, and solar to earn money on the home they already own. With so many home renovation loan options available, including 203k loans, VA loans and fix-and-flip loans, it makes financial sense. How does it work?

Imagine George who buys a small $350,000 single family home with 1,500 square feet that needs remodeling. At today’s mortgage rates, George will pay $2,919 in monthly mortgage payments. George does what most homebuyers do, according to the National Association of Realtors: Spend $19,000 on credit cards to make basic improvements at a 25% interest rate – as high as $4,750 in the first year!


George’s Net Monthly Payment*

$2,522 monthly mortgage + $397 credit card payment (interest only) = $2,919


His neighbor, Kyle, bought a similar house but remodeled it using a Renovation Loan from loanDepot ( Kyle converted his detached garage into a 1-bedroom rental unit and charges $1,500 rent. He also added solar and then switched to electric cars to save $60 gas each week. Kyle’s total monthly mortgage payment is higher ($3,254), but his interest rate is much lower than a credit card and the interest payments are tax deductible. While only your CPA can estimate your tax deductible portion, we can estimate the following:


Kyle’s Monthly Payment**

$3,254 monthly mortgage
- $200 electric bill
- $240 per month for gas
+ $1,500 rental income
$1,314 monthly payment

So Kyle is paying $1,605 per month less for a bigger, remodeled home.

Increase Your Home’s Value

When George goes to sell his home, it may have decreased in value because it’s still outdated and needs repairs. Kyle may get the value of more square footage in the appraisal plus the value of a fully-paid solar system. In fact, if Kyle added 800 square feet when he built the rental unit, he could potentially receive an appraisal for $186,000 more for his home!



The Best Home Improvement Loans

These are the kinds of loan scenarios you can review with a good loan officer to see if your remodel makes financial sense. Fortunately, Michael Stowers at loanDepot ( specializes in real estate finance strategy, and he offers every type of renovation loan option including:

  • FHA 203k loans

  • FHA 203k Streamline

  • VA Renovation loans – with no cap on renovation!

  • Fannie Mae Homestyle Renovation Loans


When you finance your loan with loanDepot, you also get the Lifetime Guarantee so you can refinance your mortgage at any time, for any reason, with no lender or appraisal fees.

If you need more space or would like to make money on your home, consider a rehab loan and talk to Mike Stowers about your options.


*This information is not intended to be an indication of loan qualification, loan approval or commitment to lend. Loans are subject to credit and property approval. Other limitations may apply. Rates terms and availability of programs is subject to change without notice (122018 128223d), LLC. NMLS #174457 ( Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act CRMLA 4131040. For more licensing, please visit

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