The Backyard Builders Round 2 is supported with funds from the California Department of Housing and Community Development (HCD). Please note that Round 2 has different rules from the 2024 pilot program.
Loan Terms
- 2% interest rate
- 30-year term
- Payments deferred for life of loan
Some of the Owner/Property Requirements
- Owner and full-time occupant of the home
- Household must earn less than the “low income” amount as defined by the State of California for Los Angeles County. Household income includes all sources of income for every adult that lives in the home.
| 2025 State Income Limits - Los Angeles County* | |
| Household Size | Maximum Annual Gross Income |
| 1 | $84,850 |
| 2 | $96,950 |
| 3 | $109,050 |
| 4 | $121,150 |
| 5 | $130,850 |
| 6 | $140,550 |
| 7 | $150,250 |
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*The State of California updates the income limits annually, typically in late Spring. 2026 Income Limits will be posted once available. |
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Selection Criteria
The funding source for Round 2 requires ADU loans to be restricted to three geographic areas in the city. The City will first prioritize properties that are in federally designated Opportunity Zones or Justice40 initiative areas. Both are place-based investment strategies designed to direct capital into underserved or under-resourced communities.
If funds are still available after selection of applicants from the first priority group, the City will select applicants who live in areas designated as High or Higher Resource by the State of California. High or Higher Resource areas are neighborhoods with characteristics that support positive economic, educational and health outcomes for low-income families and children.
A lottery will be held for applications within each group. All loans may come from Priority Group 1.
- Priority Group 1: properties within an Opportunity Zone or Justice40 Initiative Area
- Priority Group 2: properties within a High or Higher Resource Area
Visit the Backyard Builders Round 2 Portal to enter your address and check your eligibility. Additional underwriting and program guidelines will be released in Summer 2026.
