California ADU Laws 2026: Complete Guide to Building Accessory Dwelling Units and Granny Flats

California has become the nation's leader in accessory dwelling unit (ADU) development, thanks to progressive state legislation that dramatically simplified building requirements and fast-tracked permitting. Whether you're looking to house aging parents, generate rental income, or increase property value, understanding California's ADU regulations is essential.

This comprehensive guide covers everything you need to know about building ADUs in California in 2026, including current regulations, costs, financing options, and step-by-step implementation strategies.

What Is an ADU?

An accessory dwelling unit (ADU)—also called a granny flat, in-law unit, backyard cottage, or secondary unit—is a self-contained residential dwelling located on the same lot as a primary residence.

Types of ADUs in California

Detached ADU:

• Separate structure from main home
• Most common type
• Maximum privacy for occupants
• Typically most expensive option

Attached ADU:

• Connected to primary residence
• Shares at least one wall with main house
• Converts garage, adds room extension
• More cost-effective than detached

Junior ADU (JADU):

• Created within existing primary residence
• Maximum 500 square feet
• Must include bathroom efficiency or shared bathroom
• Must include kitchenette (can be efficiency kitchen)
• Converted bedroom or interior space
• Most affordable option

Garage Conversion ADU:

• Converts existing garage to living space
• Maintains garage footprint
• Cost-effective since structure exists
• Most popular conversion type

California ADU Laws: Key Provisions

California's ADU laws have evolved significantly since 2017, with major updates designed to encourage ADU development and address the housing crisis.

Minimum Lot Requirements

Single-family residential zones:

• One ADU allowed on any single-family lot
• Plus one JADU allowed simultaneously
• No minimum lot size required (as of 2020)

Multifamily residential zones:

• At least two ADUs allowed in existing multifamily buildings
• Converting non-habitable space (storage, garage, etc.)
• Additional detached ADU(s) allowed on lot (minimum 25% of existing units, up to maximum determined by local ordinance)

Size Limits

Detached ADU maximum sizes (statewide minimum standards):

• 800 square feet minimum allowed for one bedroom
• 1,000 square feet minimum allowed for two+ bedrooms
• Local jurisdictions may allow larger (but cannot require smaller)

Attached ADU maximum sizes:

• 850 square feet for studio or one bedroom
• 1,000 square feet for two or more bedrooms
• 50% of primary dwelling size (if that's larger)

Junior ADU (JADU):

• Maximum 500 square feet
• Created within primary residence footprint

Conversion ADUs:

• No limit when converting existing space
• Governed by building code, not size maximums

Setback Requirements

California law establishes statewide setback minimums:

Detached new construction ADU:

• 4 feet from side and rear property lines (minimum)
• Cities cannot require larger setbacks (with limited exceptions)

Conversion ADUs (garage, existing structures):

• 0 feet setback allowed (no setback requirements)
• Preserves existing legal setbacks

Fire safety setbacks:

• May require larger setbacks for fire safety in high fire hazard zones
• Must be supported by findings

Height Limits

Detached ADU:

• Minimum 16 feet allowed for ADUs within setbacks
• Minimum 18 feet allowed for ADUs beyond setbacks (single-story appearance)

Two-story detached ADU:

• Must not exceed primary residence height (if primary is two+ stories)
• Maximum height varies by local jurisdiction but must allow at least 18 feet single-story

Attached ADU:

• Typically matches primary residence height regulations

Parking Requirements

Eliminated or greatly reduced:

• No parking required for ADU within 0.5 mile of public transit
• No parking required when ADU is part of existing residence or garage conversion
• No parking required in historic district
• Maximum one parking space can be required (not two)
• Parking can be tandem or via mechanical lift

Replacement parking:

• If converting garage, replacement parking for main house may not be required in many circumstances
• Varies by local jurisdiction

Owner-Occupancy Requirements

As of 2021-2025:

• Owner-occupancy requirement suspended through January 1, 2025
• Extended through 2030 in most recent legislation

Post-suspension:

• Requirements may return depending on future legislation
• Check current status as rules are evolving

Owner-occupancy when required:

• Either primary residence OR ADU must be owner-occupied
• Owner occupancy means living on property at least 60 days per year
• Affidavit required at time of permitting

Rental Restrictions

Short-term rentals:

• ADUs may not be rented for less than 30 days
• Prevents use as vacation rentals or Airbnb in most cases
• Intended to preserve long-term housing stock

Tenant protections:

• ADU tenants entitled to same protections as other renters
• Subject to local rent control where applicable
• Standard eviction processes apply

Utility Requirements

Separate utilities not required:

• ADUs may share utilities with primary residence
• Cannot require separate water, sewer, electric meters
• Allows owner to include utilities in rent

Impact fees:

• Impact fees prohibited on ADUs under 750 sq ft
• Proportional impact fees for ADUs 750+ sq ft
• Maximum impact fees even for larger ADUs
• Significant cost savings vs. new construction

Permitting Timeline

Mandated approval timelines:

• 60 days for ministerial ADU approval (no discretionary review)
• Applies to ADUs meeting objective standards
• Failure to act within 60 days = automatic approval in some jurisdictions

Plan check timeline:

• Must be completed within certain timeframes
• Varies by jurisdiction but cannot be unreasonably delayed

Building permits:

• Standard building permit timelines apply after plan approval

Local Jurisdictions: Additional Regulations

While state law establishes minimum standards, local governments may impose additional requirements in limited circumstances:

When Local Ordinances Apply

Local jurisdictions may have:

• Specific design standards (compatible with neighborhood character)
• Additional fire safety requirements (in high fire zones)
• Environmental review (when required by CEQA)
• Historic district protections
• Coastal zone regulations

Common Local Variations

Los Angeles:

• Allows up to 1,200 sq ft detached ADUs
• Streamlined approval process
• Pre-approved ADU plans available
• Bonus ADU programs in certain zones

San Diego:

• Allows ADUs up to 1,200 sq ft
• Companion units program
• Development services assistance
• Pre-approved plan sets

San Francisco:

• Complex requirements in dense urban environment
• Lot size considerations
• Building department ADU resources
• Consider hiring ADU specialist

San Jose:

• Allows larger ADUs in some cases
• ADU-specific guidance documents
• Fast-track permitting program

Always check your specific city and county regulations as they vary significantly.

Benefits of Building an ADU

Rental Income

ADUs generate substantial rental income:

California ADU rental rates:

• San Francisco Bay Area: $2,000-$3,500/month
• Los Angeles area: $1,800-$3,000/month
• San Diego: $1,600-$2,500/month
• Sacramento: $1,200-$1,800/month
• Inland Empire: $1,000-$1,600/month

Annual income potential:

• High-cost areas: $24,000-$42,000/year
• Mid-cost areas: $18,000-$30,000/year
• Lower-cost areas: $12,000-$20,000/year

This income can offset mortgage payments, fund retirement, or build wealth.

Increased Property Value

ADUs increase property values significantly:

Value increases:

• Detached ADU: +20-35% property value increase
• Attached ADU: +15-25% property value increase
• JADU: +10-18% property value increase

Example:

• $800,000 primary residence
• Add $120,000 detached ADU
• Property value increases to $1,000,000-$1,080,000
• Net equity gain: $80,000-$160,000 beyond construction cost

Multi-Generational Living

ADUs provide ideal solutions for:

• Aging parents needing nearby care
• Adult children transitioning to independence
• Caregivers requiring on-site housing
• Extended family living arrangements

Maintains privacy while keeping family close.

Home Office or Studio

For self-employed professionals:

• Dedicated workspace separate from home
• Professional environment for clients
• Tax deduction potential
• Work-life separation

Guest Accommodations

Provide comfortable space for:

• Visiting family and friends
• Long-term guests
• Adult children visiting from college
• Holiday gatherings

Housing Affordability Solution

ADUs address California's housing crisis:

• Increases housing supply without sprawl
• Provides affordable rental options
• Utilizes existing infrastructure
• Gentle density in established neighborhoods

ADU Construction Costs in California

Cost Ranges by Type

Detached new construction ADU:

• 400-600 sq ft: $120,000-$200,000
• 600-800 sq ft: $180,000-$280,000
• 800-1,200 sq ft: $250,000-$400,000

Cost per square foot: $250-$400/sq ft average (varies widely by market, finishes, complexity)

Attached ADU:

• Addition/extension: $200-$350/sq ft
• Shares foundation, roof, utilities with main house
• Typically 20-30% less than detached

Garage conversion:

• $80,000-$150,000 typical range
• $100-$200/sq ft
• Most cost-effective option
• Structure already exists

Junior ADU (JADU):

• $30,000-$80,000
• Interior conversion of existing space
• Minimal structural work
• Most affordable option

Cost Factors

Site preparation:

• Grading and excavation: $5,000-$20,000
• Utility connections: $10,000-$30,000
• Foundation: $15,000-$40,000

Structure:

• Framing: $20-$40/sq ft
• Roof: $8,000-$20,000
• Siding/exterior: $10,000-$25,000
• Windows and doors: $5,000-$15,000

Interior finishes:

• Kitchen: $15,000-$40,000
• Bathroom: $10,000-$25,000
• Flooring: $5,000-$15,000
• Paint and trim: $3,000-$8,000

Systems:

• Electrical: $8,000-$15,000
• Plumbing: $10,000-$20,000
• HVAC: $8,000-$18,000

Soft costs:

• Design and architecture: $5,000-$15,000
• Engineering: $3,000-$8,000
• Permits and fees: $5,000-$20,000
• Contingency (10-15%): $10,000-$40,000

Cost Reduction Strategies

Use pre-approved plans:

• Many cities offer free pre-approved ADU plans
• Streamlined permitting
• Reduced design costs
• Proven designs

Choose garage conversion:

• Existing structure saves foundation, roof, framing costs
• Faster timeline
• Less site disruption

Build JADU instead:

• Utilize existing interior space
• Minimal structural changes
• Lowest cost option

Standardized finishes:

• Avoid custom features
• Use builder-grade materials
• Prioritize function over luxury

Consider prefab/modular:

• Factory-built ADUs delivered to site
• Faster construction
• More predictable costs
• Typically $200-$350/sq ft installed

Get multiple bids:

• Interview 3-5 contractors
• Compare scope and pricing
• Check references thoroughly
• Verify licenses and insurance

Financing Your ADU

[Home Equity Line of Credit](/blog/best-heloc-lenders-2026) (HELOC)

Most flexible and common ADU financing option:

Advantages:

• Access equity in your home
• Only pay interest on amount used
• Flexible draw period
• Rates typically lower than personal loans

Typical terms:

• Loan-to-value up to 80-90%
• Interest-only payments during draw period
• Variable interest rates (currently 7-9%)

HonestCasa specializes in HELOCs for ADU construction with competitive rates and flexible terms.

[Cash-Out Refinance](/blog/cash-out-refinance-guide)

Replace existing mortgage with larger loan:

Advantages:

• Single monthly payment
• Fixed interest rate available
• Access large sums for construction
• Potentially lower rate than HELOC

Considerations:

• Refinancing costs (2-5% of loan amount)
• May increase monthly payment significantly
• Extends loan term
• Only makes sense if current rate is similar to new rate

Home Equity Loan

Fixed-rate second mortgage:

Advantages:

• Fixed interest rate
• Predictable monthly payment
• Known total cost

Considerations:

• Less flexible than HELOC
• Two monthly payments (mortgage + equity loan)
• May have prepayment penalties

[Construction Loan](/blog/construction-loan-guide)

Short-term loan specifically for building:

How it works:

• Approved for construction amount
• Funds disbursed in draws as work progresses
• Interest-only during construction
• Convert to permanent financing or pay off at completion

Typical terms:

• Higher interest rates (8-12%)
• Short duration (12-18 months)
• Requires detailed construction budget
• Regular inspections before draws

Personal Loan

Unsecured financing option:

Advantages:

• No home used as collateral
• Fast approval process
• Fixed rate and term

Disadvantages:

• Higher interest rates (10-20%)
• Lower loan amounts (typically $50,000 max)
• Shorter terms increase monthly payment

Government Programs

CalHFA ADU Grant Program:

• Grants up to $40,000 (when available)
• For low-to-moderate income homeowners
• Must commit to affordable rent
• Competitive application process

FHA Title 1 loan:

• Up to $25,000 for improvements
• No equity required
• Fixed rate
• Limited to smaller projects

Local programs:

• Some cities offer ADU financing assistance
• Pre-development loans
• Low-interest loans for affordable ADUs
• Check your city's housing department

Rental Income Financing

Some lenders consider projected ADU rental income:

Requirements:

• Appraisal showing ADU design
• Rental market analysis
• Typically 75% of projected rent counts
• Debt-to-income calculation includes rental income

Step-by-Step ADU Development Process

Phase 1: Planning and Feasibility (1-2 months)

Step 1: Determine ADU type and size

• Assess your lot and existing structures
• Decide between detached, attached, JADU, or conversion
• Consider budget and intended use

Step 2: Check local regulations

• Contact city/county planning department
• Review zoning and ADU ordinances
• Identify any special restrictions (historic, coastal, etc.)
• Understand setbacks, height limits, and size allowances

Step 3: Set budget

• Estimate construction costs
• Include soft costs (design, permits, fees)
• Add 15-20% contingency
• Secure financing pre-approval

Step 4: Choose design approach

• Pre-approved city plans (free/low-cost)
• Architect custom design ($5,000-$15,000)
• Prefab/modular ADU (design included)
• Design-build firm (integrated design-construction)

Phase 2: Design and Engineering (2-3 months)

Step 5: Create design plans

• Floor plan and layout
• Elevations (exterior views)
• Site plan showing location on lot
• Consider accessibility and universal design

Step 6: Engineering

• Structural engineering
• Soils report (if required)
• Survey (if required)
• Title 24 energy compliance calculations
• Utility connections plan

Step 7: Finalize plans

• Incorporate engineering
• Ensure compliance with all codes
• Select finishes and fixtures
• Create detailed specifications

Phase 3: Permitting (1-2 months ministerial, longer if discretionary)

Step 8: Submit permit application

• Building permit application
• Complete plan set
• Engineering reports
• Property title documentation
• Owner-occupancy affidavit (if required)

Step 9: Plan check

• Building department reviews plans
• Respond to any corrections or questions
• Resubmit revised plans if needed

Step 10: Permit issuance

• Receive approved plans
• Pay permit fees
• Receive building permit
• Post permit on site

Phase 4: Construction (3-8 months)

Step 11: Site preparation

• Demolition (if conversion)
• Grading and excavation
• Temporary utilities for construction

Step 12: Foundation

• Foundation excavation
• Rebar and formwork
• Concrete pour
• Foundation inspection

Step 13: Framing

• Floor framing
• Wall framing
• Roof framing
• Framing inspection

Step 14: Rough installations

• Electrical rough-in
• Plumbing rough-in
• HVAC installation
• Insulation
• Rough inspections

Step 15: Exterior finishes

• Roofing
• Siding
• Windows and doors
• Exterior paint

Step 16: Interior finishes

• Drywall
• Interior paint
• Flooring
• Cabinets and countertops
• Trim and millwork

Step 17: Finish installations

• Electrical fixtures and devices
• Plumbing fixtures
• Appliances
• HVAC registers and thermostats

Step 18: Final inspections

• Building final inspection
• Energy compliance (Title 24)
• Any special inspections
• Certificate of occupancy

Phase 5: Completion (1 month)

Step 19: Punch list

• Walk through with contractor
• Document any incomplete or defective items
• Contractor completes punch list

Step 20: Final completion

• Final payment to contractor
• Receive warranties and manuals
• Set up utilities in tenant name (if renting)
• Move in or prepare for tenant

Total timeline: 7-15 months depending on complexity

Renting Your ADU

Setting Rent

Research comparable rentals in your area:

Factors affecting rent:

• Size and layout
• Finish quality and amenities
• Location and neighborhood
• Parking availability
• Utilities included or separate
• Outdoor space or patio

Pricing strategy:

• Price competitively for faster lease-up
• Consider including utilities for simpler management
• Adjust seasonally if market supports it

Finding Tenants

Marketing channels:

• Zillow, Craigslist, Facebook Marketplace
• Local rental listing services
• "For Rent" sign on property
• Word of mouth and referrals
• Property management company

[Tenant screening](/blog/best-property-management-software-2026):

• Rental application
• Credit check (minimum 620 score recommended)
• Income verification (3x rent as monthly income)
• Employment verification
• Rental history and references
• Background check

Lease Agreements

Essential terms:

• Rent amount and due date
• Security deposit (max 2 months in CA for unfurnished)
• Lease duration (typically 12 months)
• Utilities responsibility
• Maintenance responsibilities
• Pet policy
• Parking provisions
• Rules and regulations

Use California-compliant lease templates or attorney-drafted leases.

Legal Compliance

California rental law:

• Habitability standards
• Security deposit limits and handling
• Rent increase limitations
• Proper eviction procedures
• Discrimination protections (Fair Housing Act)
• Rent control (where applicable)

Tax implications:

• Rental income is taxable
• Deduct expenses: mortgage interest, property tax, insurance, maintenance, depreciation
• Depreciate ADU over 27.5 years
• Consider DSCR loan if rental income qualifies

Learn more about DSCR loans for rental properties at HonestCasa.

Property Management

Self-management:

• Save 8-10% management fees
• Direct tenant relationship
• More control
• Time commitment for maintenance and tenant issues

Professional management:

• Hands-off approach
• Expert tenant screening
• Maintenance coordination
• Legal compliance
• Typical cost: 8-10% of rent

ADU Design Tips

Maximize Space Efficiency

Open floor plans:

• Combine living, dining, kitchen in small units
• Visual spaciousness
• Flexible furniture arrangements

Multi-functional furniture:

• Murphy beds or sofa beds
• Fold-down tables
• Built-in storage

High ceilings:

• Creates feeling of spaciousness
• Allows for lofts or high storage

Large windows:

• Natural light makes spaces feel larger
• Views to outdoor space
• Energy efficiency considerations

Storage Solutions

Built-in storage:

• Under-stair storage
• Window seats with storage
• Built-in shelving and cabinets

Vertical storage:

• Floor-to-ceiling cabinets
• Wall-mounted shelving
• Overhead garage-style storage (in garages)

Outdoor storage:

• Small shed or storage box
• Reduces interior clutter
• Seasonal item storage

Energy Efficiency

California Title 24 compliance:

• High-efficiency HVAC
• LED lighting
• Low-flow plumbing fixtures
• Properly sized and sealed ducts

Additional efficiency measures:

• Solar panels (if budget allows)
• Heat pump water heater
• Energy-efficient appliances (ENERGY STAR)
• Smart thermostat
• Proper insulation and air sealing

Universal Design

Consider accessibility features:

• No-step entry
• Wide doorways (36" minimum)
• Accessible bathroom with curbless shower
• Lever door handles
• Adequate lighting

Increases potential tenant pool and future-proofs the unit.

Outdoor Living Space

Patio or deck:

• Extends living space
• Outdoor dining area
• Visual connection to landscape

Landscaping:

• Privacy screening with plants or fencing
• Low-maintenance plantings
• Drought-tolerant California natives

Separation from main house:

• Privacy fencing or plantings
• Separate entrances
• Sound barriers if needed

Common ADU Challenges and Solutions

Challenge 1: High Construction Costs

Solutions:

• Use pre-approved plans to reduce design costs
• Choose garage conversion over new construction
• Standard finishes instead of high-end
• Get multiple contractor bids
• Consider prefab/modular ADUs
• Build smaller (600 sq ft vs 1,200 sq ft)

Challenge 2: Lengthy Permitting

Solutions:

• Hire experienced ADU architect/designer
• Submit complete, compliant plans first time
• Use pre-approved plans where available
• Work with city staff early in process
• Consider hiring expeditor for complex projects

Challenge 3: Financing Difficulties

Solutions:

• Build equity in primary residence first
• Consider HELOC for flexibility
• Use JADU for lower cost entry
• Explore government assistance programs
• Partner with family member for capital

Challenge 4: Neighborhood Opposition

Solutions:

• Communicate with neighbors early
• Address concerns proactively (privacy, parking, design)
• Follow all regulations and design guidelines
• Consider neighborhood-compatible design
• Emphasize shared benefits (property values, community)

Challenge 5: Utility Capacity

Solutions:

• [Electrical panel upgrade](/blog/electrical-panel-upgrade-guide) if needed ($2,000-$5,000)
• Water meter size may need increase
• Sewer lateral assessment
• Factor utility upgrades into budget

Challenge 6: Site Constraints

Solutions:

• Creative design for narrow lots
• Two-story ADU if lot is small
• Attached instead of detached
• JADU if site is severely constrained

ADU Resources in California

State Resources

California HCD (Housing and Community Development):

• Official ADU guidance
• Model ordinances
• State law updates
• www.hcd.ca.gov/adu

CalHFA (California Housing Finance Agency):

• ADU financing programs
• Grant opportunities
• www.calhfa.ca.gov

Local Resources

City ADU programs:

• Check your city's planning or building department website
• Many cities offer ADU-specific guidance, pre-approved plans, and resources

Example city resources:

• Los Angeles: LADBS ADU page
• San Diego: ADU information
• San Jose: ADU development

Professional Associations

AIA California (American Institute of Architects):

• Find ADU-experienced architects

AIBD (American Institute of Building Design):

• Building designers with ADU expertise

California Association of Realtors:

• ADU valuation and sale guidance

ADU-Specific Companies

Design and Architecture:

• Abodu (prefab ADUs)
• Maxable (ADU consulting)
• Cover (prefab ADUs)
• United Dwelling (full-service ADU development)

Contractors:

• Search for ADU-specialist contractors in your area
• Check Houzz, Yelp, and contractor referral services

Tax Implications of ADUs

Property Tax Reassessment

California Proposition 13 implications:

• ADU construction triggers reassessment of added value only
• Primary residence value typically not reassessed (unless also renovated)
• New assessed value = old value + new construction value

Example:

• Primary residence assessed value: $600,000
• Add $150,000 ADU
• New total assessed value: $750,000
• Annual property tax increase: ~$1,500 (at 1% rate + local assessments)

Income Tax Considerations

Rental income:

• Fully taxable as ordinary income
• Report on Schedule E

Deductible expenses:

• Mortgage interest (proportional to ADU)
• Property taxes (proportional to ADU)
• Insurance
• Utilities (if landlord-paid)
• Repairs and maintenance
• Property management fees
• Advertising
• Legal and professional fees

Depreciation:

• Depreciate ADU structure over 27.5 years
• Bonus depreciation may apply to personal property
• Consider cost segregation study for larger ADUs

Example:

• $200,000 ADU construction cost
• $180,000 depreciable basis (excluding land)
• $6,545 annual depreciation deduction

Learn more about maximizing tax deductions on rental property.

Capital Gains Considerations

[Primary residence exclusion](/blog/capital-gains-tax-real-estate):

• ADU may affect primary residence exclusion if used as rental
• Proportional disallowance of exclusion
• Recapture of depreciation taken on ADU

Example:

• Sell property after renting ADU 5 years
• ADU represents 20% of total property value
• $500,000 capital gain exclusion (married filing jointly)
• 80% qualifies for exclusion ($400,000)
• 20% subject to capital gains ($100,000)
• Plus depreciation recapture on ADU portion

Conclusion

California's progressive ADU laws have created unprecedented opportunities for homeowners to add value, generate income, and address housing needs through accessory dwelling units. With streamlined permitting, reduced regulations, and growing financing options, building an ADU in 2026 is more accessible than ever.

Whether you're seeking rental income, multi-generational housing solutions, or [property value appreciation](/blog/best-cities-appreciation-2026), ADUs offer flexible and rewarding opportunities. Success requires thorough research of local regulations, realistic budgeting, quality design and construction, and proper planning.

Start by determining which ADU type fits your property, budget, and goals, then assemble a qualified team of professionals to guide you through design, permitting, and construction. With the right approach, your ADU can provide decades of value, income, and flexibility.

For homeowners considering financing options for ADU construction, HonestCasa offers specialized HELOC solutions designed for home improvement projects with competitive rates and flexible terms.

Related Articles

• ADU Building Guide: Planning Your Accessory Dwelling Unit
• Texas ADU Regulations: Complete State Guide
• Florida ADU Laws: Building Granny Flats in the Sunshine State
• HELOC for Home Improvements: Complete Financing Guide
• [[Rental Property Investing](/blog/best-cities-for-rental-income-2026) for Beginners](/blog/rental-property-investing-beginners-guide)