If you have a home with lots of equity, it's easier to finance your ADU project at the lowest possible rate. Just remember that you cannot necessarily cash out all the equity in your home. Different loan programs allow different amounts. So for example if your best loan option only allows you to cash out 80% of the value you of your house, then you can do the math:
Your property value: $700,000 Amount of your maximum loan (80% loan-to value): $560,000
Your current mortgage amount: $440,000 TOTAL you can cash out: $120,000
If that's not enough cash to cover construction costs, we have a solution: Renovation Loans. These are based on future appraised value, and they provide the construction budget for most of our clients.