Yes — Multiple Financing Options Exist
One of the most common misconceptions about ADU construction is that you need to pay cash. In reality, Florida homeowners have several strong financing options — especially if you have built up equity in your Orlando home since 2020, when values rose sharply across Central Florida.
R&S financing advantage: R&S General Construction has established relationships with lending partners who specialize in construction and renovation financing in Florida. We can connect you with lenders who understand ADU projects, move faster, and offer terms designed for this type of construction. Ask us at your free consultation.
Option 1: HELOC — Home Equity Line of Credit
A HELOC is a revolving credit line secured by your home equity — similar to a credit card but at much lower rates. You draw funds as needed during construction and only pay interest on what you use. Most HELOCs have a draw period (typically 10 years) followed by a repayment period.
For Orlando homeowners who bought before 2022 and have significant appreciation, a HELOC is often the most flexible and cost-effective ADU financing option. The interest may be tax-deductible if funds are used for property improvement (consult a tax advisor).
Option 2: Home Equity Loan (Second Mortgage)
A home equity loan provides a lump sum at a fixed interest rate, secured by your home equity. Unlike a HELOC, the rate is fixed for the life of the loan — providing payment predictability. You receive the full amount upfront and pay it back in fixed monthly installments.
Option 3: Cash-Out Refinance
Replace your current mortgage with a larger one and receive the difference in cash. This makes most sense if your current mortgage rate is close to or above today’s rates, or if you need a large amount and want to consolidate into one payment. If you have a sub-4% rate, this option usually costs more than a HELOC or home equity loan.
Important: If your current mortgage rate is below 5%, a cash-out refinance will increase your monthly payment significantly. In most cases, a HELOC or home equity loan preserves your existing rate while providing construction funds.
Option 4: Construction Loan
A construction loan provides funds specifically for building, disbursed in stages as construction milestones are reached (called “draws”). Once construction is complete, it typically converts to a permanent mortgage or is paid off with a HELOC or equity loan. More complex to qualify for, but useful when equity is limited.
Option 5: Fannie Mae ADU-Specific Programs
Fannie Mae has expanded guidelines to support ADU construction and financing. The HomeStyle Renovation loan and HomeReady programs both include provisions for ADU construction as part of a purchase or refinance. These allow the projected rental income from the ADU to be included in your qualifying income, which can significantly improve loan eligibility.
These programs are particularly useful for borrowers who want to purchase a property with an existing ADU or build one as part of a refinance transaction.
R&S Lending Partners
R&S General Construction has established relationships with lending partners in Florida who specialize in renovation and construction financing. These lenders understand how ADU projects work, the draw schedule process, and the timeline of permitted construction in Orlando.
When you consult with R&S, we can introduce you to a lending partner who will review your specific situation — home value, existing equity, income, and project scope — and recommend the most cost-effective financing path for your ADU project.
Note: R&S does not charge for financing referrals. Our goal is to help you build — and connecting you with the right lender is part of making that happen.
Which Financing Option Is Right for You?
| Your situation | Best option |
|---|---|
| You have significant equity and a low mortgage rate | HELOC or Home Equity Loan |
| You want fixed monthly payments | Home Equity Loan |
| Your current rate is already at or above market | Cash-Out Refinance |
| Limited equity but strong income | Construction Loan |
| Purchasing a property with ADU plans | Fannie Mae HomeStyle |
| Not sure what you qualify for | Talk to R&S — we’ll connect you with a lender |
Does the ADU Pay for Itself?
In most Orlando scenarios — yes. A $120,000 ADU generating $1,600/month in rental income produces $19,200/year. A home equity loan at 8% for 15 years on $120,000 costs approximately $1,147/month or $13,764/year. The ADU generates more income than the financing costs — from day one of rental occupancy.
The net cash flow in this scenario is approximately $453/month after financing costs — and the ADU itself adds $100,000–$130,000 to property value. Over 15 years (loan payoff), the total financial benefit significantly exceeds the cost of the project.
ADU Projects: Real Examples in Orlando, FL
Browse real ADU and guest house projects — from farmhouse-style cottages to tropical backyard studios and craftsman detached suites. R&S General Construction builds fully permitted ADUs in Orlando and surrounding areas.
Interested in adding an ADU to your property? Contact R&S General Construction for a free consultation and estimate.