A garage-to-ADU conversion is financed like any other project where you tap equity to pay for work, with one wrinkle: the value the ADU will add doesn't exist yet. If you have enough equity today, the common routes are: - A second mortgage (home equity loan or HELOC) that funds the build and leaves your first mortgage in place. - A cash-out refinance of the first mortgage, if replacing the whole loan makes sense for you. If today's equity won't cover the project, there are products built for exactly that gap. Some second-mortgage programs qualify you off the after-completion value rather than today's value. Renovation loans work the same way: an FHA 203(k) is underwritten to the after-improved value established by the appraisal, with the standard version capping the mortgage at 100 percent of that value, and conventional renovation loans like HomeStyle also underwrite to the as-completed value. That lets the finished ADU's projected value help carry the financing. The important part is working with a loan officer who actually knows ADU financing, because these after-completion-value products have specific rules and not every lender handles them well. Confirm current program requirements, and we're glad to look at your equity and the numbers with you in the free Roadmap conversation, about 20 minutes where we run your real numbers.