Building an ADU in Boise is a smart way to add rental income, house family, or grow your property’s value. But most homeowners hit the same wall first: how do you actually finance an ADU in Boise? Whether you’re financing an ADU on your primary residence or an investment property, Boise ADU financing comes down to a handful of real paths — here’s how each one works, and where Mode Homes can help you find the right fit.
Financing an ADU on Your Primary or Secondary Home in Boise
If you’re building an ADU on the home you live in — or a second home — you have the most financing paths available. Here are the five main ways Boise homeowners fund an ADU, and how they differ.
1. Renovation HELOC
A renovation HELOC works like a normal home equity line of credit, but with one key difference: it gives you credit for the future value your ADU will create, not just your home’s current value. That means your available credit line is calculated using the after-repair value (ARV) — the appraised value once the ADU is complete — so you can borrow against equity that doesn’t exist yet. You draw funds as construction costs come in, and the rate is typically variable.
2. Second Mortgage
A second mortgage gives you a lump sum upfront, at a fixed rate, over a fixed term — commonly 20 or 30 years. Like a renovation HELOC, it can be based on ARV, but with a predictable, unchanging payment instead of a variable one. This is the structure First Federal Savings & Loan offers, and it’s a strong fit if you want to keep your existing low-rate first mortgage untouched.
3. Cash-Out Refinance
A cash-out refinance replaces your entire first mortgage with a new, larger one, based on your home’s current equity — and gives you the difference in cash to fund construction. This resets your primary mortgage rate and term, so it makes the most sense if current rates are at or below what you’re already paying.
4. Pay Cash, Then Refinance to Recapture Value
Some homeowners fund the ADU with cash upfront, then get the property reappraised once it’s complete. Because the ADU has added real value, the new appraisal supports a new mortgage sized to that higher value — letting you recapture some or all of your cash outlay after the fact. This avoids financing costs during construction, but it does require having the cash available upfront.
5. Renovation Loan (Fannie Mae / Freddie Mac, or Private)
Renovation loans — through Fannie Mae or Freddie Mac programs, or private lenders like RenoFi — are built specifically to fund a home improvement project and roll it into a single mortgage based on the completed value. These are the products Waterstone Mortgage, Global Credit Union, and RenoFi offer in the Treasure Valley, typically up to 90–95% of ARV.
Lenders to Know for Your Primary or Secondary Home
| Lender | Financing Type | Notes |
| First Federal | 20/30-yr fixed second | Local bank, flexible underwriting |
| Waterstone Mortgage | Renovation 2nd, up to 90–95% ARV | Local office; primary/secondary homes only |
| RenoFi | Renovation 2nd, up to 90–95% ARV | National lender; primary/secondary homes only |
Financing an ADU on an Investment Property in Boise
Based on our research, there is currently no lender offering an ARV-based second mortgage or HELOC for ADU construction on investment properties — the future-value products above are only available on primary and secondary homes. Investment property financing instead runs through one of three paths, each built around getting the project built first and refinancing into permanent financing second.
1. Hard Money → Mortgage
A hard money loan is short-term, asset-based financing used purely to fund construction. It’s not meant to be permanent financing — it’s a bridge to get the ADU built and the property “stabilized” (completed, occupied, and generating rental income). Once stabilized, you refinance the hard money loan into a permanent mortgage — either a conventional loan or a DSCR loan, which qualifies based on the property’s rental income rather than your personal income.
2. Cash → Mortgage
Some investors first tap cash reserves or a HELOC on another property to cover construction costs, then refinance into a conventional or DSCR mortgage once the project is stabilized.
3. DSCR HELOC / Second Mortgage on the Existing Structure
Rather than financing the ADU as new construction debt, some investors instead take a DSCR-based HELOC or second mortgage against the existing rental property — qualifying off the current rents the property already generates. This can fund the ADU build directly, without a hard money bridge step, if the existing property has enough rental income and equity to support it.
In short: cash or hard money funds the build, and a DSCR or conventional refinance is what keeps you in the property long-term at a sustainable rate. Which of the three paths above makes sense depends on your existing equity, cash position, and the rental income the property already produces.
DSCR Lenders to Know
| Lender | Notes |
| Griffin Funding | DSCR 2nd Mortgage / HELOC |
| Figure | Non-bank DSCR 2nd |
| LNH Capital | DSCR 2nd |
Mode Homes can also connect you directly to hard money financing for new construction, fix-and-flip, and DSCR loan structures — helping you move quickly from breaking ground to a stabilized, refinanced property.
FAQs
How do I finance an ADU in Boise?
Most Boise homeowners use one of five paths on a primary or secondary home — a renovation HELOC, second mortgage, cash-out refinance, pay-cash-then-reappraise, or a Fannie Mae/Freddie Mac renovation loan. Investment properties typically go through hard money first, then refinance into a conventional or DSCR mortgage.
Is ADU financing in Boise different for investment properties?
Yes. There’s currently no ARV-based second mortgage or HELOC for investment properties in Boise — those future-value products are only available on primary and secondary homes. Investment property ADU financing instead runs through hard money construction loans, refinanced into a permanent mortgage once the property is stabilized.
