Make Your ADU Affordable
Your Elbow Room is an investment that can pay for itself. We've partnered with lenders who specialize in ADU projects to help you find the right path forward.
An ADU That Pays for Itself
A professionally built ADU isn't just additional space — it's one of the most effective ways to increase your property's value and generate income from your own backyard.
Central Texas rental markets consistently support strong returns on ADU investments. Whether you plan to rent long-term, host family, or simply add square footage to your property, the financial case is compelling. Many homeowners see their ADU reach positive cash flow within the first year.
We don't offer direct financing, but we work closely with lending partners who understand ADU construction and can offer competitive terms tailored to your project. During your consultation, we'll introduce you to the right lender for your situation.
Schedule a ConsultationFrom Consultation to Construction
We guide you from first conversation to funded project. Here's what to expect.
1. Consultation
We discuss your project scope, budget, and goals. Together we'll identify which financing options make the most sense for your situation and property.
2. Lender Introduction
We connect you with our lending partners who specialize in ADU and home improvement projects. They'll walk you through rates, terms, and pre-qualification.
3. Application & Approval
Your lender handles the underwriting and approval process. We provide any project documentation they need — plans, permits, and detailed cost breakdowns.
4. Funding
Once approved, funds are released according to your loan terms. We coordinate directly with your lender on any draw schedules or milestone disbursements.
5. Construction Begins
With financing in place, your project moves forward on schedule. If you're building to rent, income can start flowing within months of breaking ground.
Leverage Your Home Equity
The most popular ADU financing options — lower rates and longer terms by using the equity you've already built.
HELOC
Draw funds as you need them and only pay interest on what you use. The flexibility makes HELOCs ideal for construction projects where costs arrive in stages.
- Variable rate, typically lower initial cost
- 5–10 year draw period
- Interest only on amount used
- Reusable credit line
Home Equity Loan
One lump sum, one fixed rate, one predictable payment. The simplicity makes home equity loans a favorite for homeowners who know their total project cost upfront.
- Fixed rate for the life of the loan
- Lump sum disbursement
- Predictable monthly payments
- Terms of 5–30 years
Home Improvement Loan
Designed specifically for construction projects on your property. Some lenders tie disbursement to build milestones — funding arrives as your ADU takes shape.
- Purpose-built for construction
- Milestone-based draws available
- Fixed or variable rate options
- Streamlined approval process
Cash-Out Refinance
Replace your existing mortgage with a new one and receive the difference in cash. A strong option when current rates are favorable or when you have significant equity built up.
- Access equity as a lump sum
- Single mortgage payment
- Potentially lower combined rate
- Replaces existing mortgage
No Home Equity? No Problem.
These options use your creditworthiness rather than your property — faster approval, fewer requirements, no lien on your home.
Personal Loan
A straightforward lump-sum loan based on your credit profile. No collateral, fast funding, and fixed payments. Best for Studios and smaller Suite projects, or as a supplement to other financing.
- No collateral required
- Funding in days, not weeks
- Fixed rate and fixed payments
- Terms of 2–7 years
Personal Line of Credit
A revolving credit line — like a HELOC, but without your home as collateral. Draw and repay as needed throughout your project. Interest applies only to what you use.
- No home equity needed
- Draw funds as needed
- Interest only on amount used
- Revolving access to funds
Building to Rent
Specialized products for homeowners building for rental income, real estate investors, or those who need construction-specific financing structures.
Construction Loan
Funds are disbursed in stages as your ADU takes shape, with interest-only payments during the build. Once construction is complete, the loan converts to a permanent mortgage.
- Staged disbursement tied to milestones
- Interest-only during construction
- Converts to permanent financing
- Lender inspections at each draw
DSCR Loan
Qualify based on your ADU's projected rental income rather than your personal income. If the property generates enough to cover the payment, you're likely eligible — regardless of your W-2.
- Qualification based on rental income
- Personal income not the primary factor
- Designed for income-producing properties
- Competitive rates for qualified properties
Build-to-Rent
Finance the construction and transition seamlessly into a long-term loan backed by the rental income your ADU will generate. One closing, one strategy, one streamlined process.
- Construction + permanent financing combined
- Rental income projection for qualification
- Single closing for both phases
- Ideal for ADU rental strategy
Loans at a Glance
Side-by-side comparison to help you narrow down the right option.
| Loan Type | Collateral | Rate | Best For |
|---|---|---|---|
| HELOC | Home equity | Variable | Flexible draws during construction |
| Home Equity Loan | Home equity | Fixed | Known cost, predictable payments |
| Home Improvement | Home equity | Fixed / variable | Milestone-based construction draws |
| Cash-Out Refi | Replaces mortgage | Fixed | Significant equity, favorable rates |
| Personal Loan | None | Fixed | Smaller projects, fast funding |
| Personal LOC | None | Variable | Flexible draws without equity |
| Construction Loan | Property | Variable | Full builds with staged disbursement |
| DSCR Loan | Rental income | Fixed / variable | Qualify by property income, not W-2 |
| Build-to-Rent | Rental income | Fixed / variable | Construction + long-term rental strategy |
Financing Questions
Do you offer direct financing?
We don't lend directly, but we work with lending partners who specialize in ADU projects. During your consultation, we'll connect you with lenders who understand the unique aspects of ADU construction and can offer competitive terms tailored to your situation.
How much equity do I need for a home equity loan or HELOC?
Most lenders require at least 15–20% equity remaining in your home after the loan. For example, if your home is worth $400,000, you'd typically need $60,000–80,000 in equity remaining after borrowing. Your lender will provide specific requirements based on your profile.
Can I finance my ADU if I don't have home equity?
Absolutely. Personal loans and personal lines of credit don't require home equity — they're based on your creditworthiness and income. These are a good fit for Studios and smaller Suites, or as a supplement to other financing on larger projects.
Will an ADU increase my property value?
Studies consistently show that ADUs increase property values by 10–15% on average. A permitted, professionally built ADU like an Elbow Room is appraised as a permanent improvement to your property — not a temporary structure. The exact amount depends on your market, the size and quality of the build, and local demand.
What's a DSCR loan and do I qualify?
A DSCR (Debt Service Coverage Ratio) loan qualifies you based on the projected rental income of the property rather than your personal income. If your ADU's expected rent exceeds the monthly loan payment by a sufficient margin — typically 1.2x or more — you may qualify. This is popular with investors and homeowners who plan to rent their ADU full-time.
How long does the financing process take?
It depends on the loan type. Personal loans can fund in days. HELOCs and home equity loans typically take 2–4 weeks. Construction loans and cash-out refinances may take 30–45 days. We recommend starting the financing conversation early so funding is ready when construction begins.
Let's Talk Financing
Schedule a consultation and we'll connect you with lending partners who specialize in ADU projects. No obligation, no pressure.