The Round 2 Application is scheduled to be open November 1 – 30, 2026.

Please join us for an information session to learn more about the program. You only need to attend one information session. They will all have the same information.

Tuesday, Oct. 27, from 5:30 – 6:30 p.m.
Michelle Obama Library Community Room (5870 Atlantic Ave.)
In-person – RSVP

Thursday, Nov. 5, from 6:30 – 7:30 p.m.
Online via Zoom – RSVP

Saturday, Nov. 14, from 10 – 11 a.m.
Cesar Chavez Park Community Room (401 Golden Ave.)
In-person – RSVP

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Applicant Criteria

• Owner and full-time occupant of the home
• Minimum Credit score – 620
• Maximum debt-to-income ratio – 55%
• Current on mortgage and tax payments, homeowner’s insurance policy and property taxes
• Homeowner must be willing to attend any educational sessions about ADU development and property management and work with an assigned project manager
• Household must earn less than the “low income” amount as defined by the State of California for Los Angeles County. See chart below. Household income includes all sources of income for every adult that lives in the home.

Property Requirements

• Single-family home (only one unit on property)
• Must be in a program area designated by the State (see Selection Criteria section below for more information)
• Loan-to-Value Ratio, when combined with all other indebtedness secured by the property, shall not exceed 105% of the After-Rehabilitation Value.  All other liens on the home must be reviewed and approved by the City.
• The after-rehabilitated value of the home shall be at or below 150% of the highest local Los Angeles County median sales price of a single-family home with an ADU or JADU during the past six months.
• No major unpermitted structures on property
• No active/open Code Enforcement cases

ADU Requirements

The City requires that the entire project budget, including design, permits, construction (including contingency) and other fees be less than the $250,000 maximum loan amount. Therefore, the program has restrictions on the ADU that are stricter than City Building requirements. The ADU funded with this program loan must: 

• Be less than 500 square feet
• Be a single-story ADU, on the ground level
• Use off-the-shelf / standardized finishes, fixtures and appliances

ADU Usage Requirements

If the ADU is rented, there must be a minimum tenancy of 30 days. Short-term rentals are not permitted. Otherwise, there are no other restrictions on how the ADU is used.

Loan Terms

• $250,000 maximum loan
• 2% interest rate
• 30-year term
• Payments deferred for life of loan

Loan Amount	Up to $250,000, or the actual cost of the ADU, whichever is less
Interest Rate	2%
Loan Type	30-year term
Lien Position	The City’s ADU loan shall not be lower than third lien position. No financing, junior or senior to the CalHome loan may have a balloon payment due before the maturity date of the CalHome Loan.
Payments	Payments are deferred during the life of the loan.
Prepayment Penalty	There is no prepayment penalty.
Loan Repayment Requirements	The full amount of the loan, including accrued interest, must be paid at the earliest of: The 30-year anniversary of the effective date The property ceases to be owner occupied The sale, transfer, or lease of the property A “cash out” refinancing of a senior loan secured by the Property, where the principal proceeds of the new loan exceed the outstanding principal amount of the loan being paid off

Phase 1

Fill out an application at longbeach.gov/backyardbuilders.

Phase 2

The applicants selected through the lottery will be provided two weeks to submit further documentation, including but not limited to:

• Uniform Residential Loan Application
• Identification for all adults who live in the home
• Two months of pay stubs (and/or verification of other sources of income) for all adults who live in the home
• Two years of tax returns for all adults who live in the home
• Two months of statements for all bank and investment accounts (including, but not limited to, checking, savings, investment and retirement accounts) for all adults who live in the home
• Authorization to obtain credit report
• Most recent mortgage payment statement
• Proof of homeowner’s insurance
• Most recent utility bill with owner’s name

Site Visit

City staff will contact finalists to discuss the projects and potentially schedule a site visit to gauge feasibility. They will be invited to the next phase of the application process.

Participation in the program and any preliminary selection of a property are expressly conditioned upon verification of project feasibility. The City reserves the right, in its sole discretion, to withdraw or rescind a property’s selection at any time if it is determined that site conditions and constraints, or related regulatory requirements render the project infeasible, impractical, or cost-prohibitive for participation in the program.

Phase 3

Applicants who meet the underwriting criteria will move forward to the loan document execution process.

Working with Contractors

Homeowners are responsible for choosing and executing agreements with their chosen contractors, who must meet the City’s licensing and insurance requirements. To ensure the project remains on schedule, the program calls for strict adherence to timing milestones.

Payments to Contractors and Consultants

The City will open an escrow account and authorize payments at agreed-upon project milestones. Each payment will be authorized by the City, homeowner, contractor and ADU project manager. Project change orders must be approved by the City. Any funds that are not used for the project will be discounted and the promissory note amended. No funds will be distributed to the homeowner.

Property Insurance(s)

The homeowner must maintain property insurance, including fire and flood insurance if applicable, during the life of the ADU Loan. The City must be named as loss payee in first position or additional insured if the loan is a junior lien. See loan documents for more information.

Property Taxes and Assessments

The homeowner is responsible for making property tax payments on a timely basis during the term of the loan.

Adherence to Fair Housing Regulations 
(if the ADU will be used as a rental unit)

State and federal laws prohibit acts of discrimination against renters. The homeowner is responsible for reviewing information from the State Civil Rights Department’s Resources for Housing Providers and other applicable laws.

Other Loan Terms

Repayment

Loans shall be repayable upon sale or transfer of the property, when the property ceases to be owner-occupied, or upon the loan maturity date. 

Borrower may prepay all or a portion of the loan without penalty.

The following transfers of interest shall not require repayment of the loan:

• Transfer to a surviving joint tenant by devise, descent, or operation of  law on the death of a joint tenant;
• A transfer, in which the transferee is a person who occupies or will  occupy the property, which is:
• A transfer where the spouse becomes an owner of the property;
• A transfer resulting from a decree of dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement by which the spouse becomes an owner of the property; or 
• A transfer into an inter vivos trust in which the Borrower is and remains the beneficiary and occupant of the property. 

Refinance

The loan cannot be refinanced.

The City may approve a request to subordinate a loan, in order for the owner to refinance the primary mortgage, under the following conditions:

• The lien position of the City’s loan will remain the same or be advanced.
• The new primary loan is no greater than the balance of the loan being refinanced, except the costs of refinancing the loan may be added to the principal balance. 
• The purpose of the new primary loan is to reduce the interest rate being paid and/or reduce the owner’s payment.
• The refinancing terms are acceptable to the City. 

No financing, junior or senior to the City’s loan may have a balloon payment due before the maturity date of the City’s Loan.

Any cash out of escrow to Borrowers is prohibited.