HomeHome ImprovementGranny Flat Financing
Advertising Disclosure Acorn Finance receives compensation from some of the companies featured on our website, which may influence the presentation and order of the offers shown. Please note that not all loan options, savings products, or lenders are represented on our site.

Granny Flat Financing

Compare monthly payment options from several lenders in under 2 minutes.

How much would you like to finance?

Woman smiling at financial transaction on smartphone via Fiona Template.

Simple Granny Flat Loans

There comes a time in our lives when our parents may not be able to live alone anymore. It’s a hard reality to swallow, but it is what it is and it’s better to get out ahead of it. You can look at retirement communities, but those can cost an astronomical amount with no returns. Just throwing money away every month.

The construction of a granny flat is a great way to keep your parents close so they can be part of the family as well as to keep an eye on them. A granny flat also gives them their own space so everyone can still enjoy their privacy.

Another upside to adding a granny flat is that it could increase your home value. A prospective home buyer may look at that granny flat as a revenue stream that they can use to pay down the mortgage faster.

Check Offers
Quick. Simple. Secure.

How To Finance A Granny Flat Today

Check Log Cabin Loan Offers With No Impact To Your Credit Score
Security concept with shield icons across desktop and mobile platforms.


Fill out an easy online form to check for pre-qualified offers with no impact to your credit score
Concept of data sharing across desktop and mobile platforms.

Select offer

Compare terms and payment options to select the offer that’s best for you
Iconic online banking symbol depicted on computer and mobile screens.

Finish application

Complete your application on your selected lender’s website
Icon symbolizing monetary investment or support.

Receive funding

After your loan is approved, your funds should arrive within 1-2 business days2

Check offers
in seconds

Get pre-qualified for loan offers with an easy online form

Won't impact
credit scores

Checking offers will not impact your credit score

payment options

Compare rates from our network of lenders

funds quickly

Same-day and next-day available for certain offers2

Compare Rates From Lenders in Our Network

Learn More About Granny Flat Financing

When you are ready to explore how to finance a granny flat, consider finding a trusted lender through Acorn Finance.

Read more - FAQ


What is granny flat financing?

Granny flat financing can be a home equity loan, construction loan or a personal loan used to finance the construction of a granny flat at your single-family home. While there may be other ways to finance a granny flat, these are some of the most common ways. But, what is a granny flat?

A granny flat has many names. Also known as a mother-in-law apartment or an accessory apartment, they are essentially a small apartment complete with a kitchen, bathroom, and living and sleeping areas that are either attached to the house or stand-alone if the backyard is large enough. They can also be constructed above a detached garage.

When your parents age and you want to have them close to the family, a granny flat is a great way to give them their own space that is close, but not immediately within the family dwelling where space can be tight.

When there is no use for the granny flat anymore, it then can be turned into a rental unit for a monthly income stream.

Can you get a home loan for a granny flat?

Yes, you can get a home loan for a granny flat. If you have enough equity in your property, then it is pretty simple to qualify for a home loan to add on a granny flat. If you do not have enough equity, you could still qualify with the use of a guarantor.

Do you need a construction loan for a granny flat?

No, a construction loan for a granny flat is not required, but it could be an option for you. Essentially, you will have plans drawn up for the bank who will then have the project and property appraised. They will determine the value of your home before and after the new construction of the granny flat. The difference between your existing value and the potential new value is what you can borrow against. Most banks should let you borrow up to 95% of that added value.

How to finance a granny flat:

There are several ways you could finance a granny flat. If you decide to use a secured loan such as a home equity loan, you may want to start by applying with a preferred bank or credit union. While you may be able to find secured loans online, they can be complicated. It may be valuable to consult with an expert before applying.

A simpler way to finance a granny flat may be to use a personal loan. At Acorn Finance you can discover granny flat financing up to $100,000 from one of our lending partners. You check offers with no impact to your credit score.

Does a granny flat add value to your home?

Yes, a granny flat should add value to your home by providing additional living space and a potential revenue stream as a rental property. If you live in a University or College town, having a granny flat can be a great rental opportunity for students looking for housing in the area.

Are granny flats a good idea?

Yes, granny flats are a usually good idea if you have the space for new construction, have the credit to finance, and you do not want to spend money on an assisted living facility. Having your parents close can be comforting as well as cost-effective.If they need medical help, you can always hire a registered nurse to check in on them as needed.

Can I build a granny flat in my back garden?

Yes, you can! Building a granny flat in your back garden may actually be more feasible and less expensive than trying to build one above a detached garage. It may also be less intrusive than having a granny flat construction project on the side of your house all summer.

With the tiny house movement that has swept the country in recent years, you can get quite creative with your stand-alone granny flat in your back garden. One possibility is using a railroad car or a storage container on top of a concrete slab as the frame and to build in and around it. However you want to do it, the point is, yes, building a granny flat in your back garden is not only possible, but can be an excellent idea.

What is the average size of a granny flat?

When you are in the planning phase of your new granny flat, you should check with local and state building codes to make sure your granny flat is legal.

For example, the state of California mandates that any mother-in-law unit be at least 150 square feet. For attached units, the maximum size is 50 percent of the existing house up to 1,200 square feet. For detached units, you can have the granny flat be up to 1,200 square feet even if the existing house is smaller than 2,400 square feet. Detached granny flats do not have to adhere to the 50% regulation that attached units have to.

Make sure to check the regulations for your city and state.

Do you need planning permission for a granny flat?

Yes, if you live within town limits and you have a building and zoning department at your city hall, you will likely need a permit. Even if you live in the country or an unincorporated area, you still have to check with the county or local governing body to see if you will need a permit.

What is the best way to finance a granny flat?

If you are looking to finance the construction of an accessory dwelling unit on your property, there are several financing options available to you. You could use a home equity loan or a home equity line of credit. You could also consider cash-out refinancing or a construction loan.

A construction loan is generally a good idea, however, the complicated application approval process and added scrutiny of the bank during the planning and construction phases can be frustrating and time-consuming. A home equity loan is a great way to get the funds you need to construct an ADU, but what if you already have a loan out against your home, or maybe you do not even want to consider using your home as collateral to secure funds.

An unsecured personal loan can provide the funds you need to construct an ADU without providing collateral. There are many reasons you may want to construct an accessory dwelling unit. Maybe you have some older relatives coming to stay with you, or maybe you have a college-aged son or daughter who stays with you for the summer and you would like for them to have their own space. Also, an ADU makes a great rental property if you have a large enough space to accommodate an additional family or single-person living on your property.

That being said, your plans for your accessory dwelling unit may change midstream during construction as your intended uses may change as well. Depending on the changes, if you had a construction loan, you would possibly need to submit updated construction plans to the bank for approval to continue construction. This can cause delay, which costs more money and simply put, it is an inconvenience. With an unsecured personal loan, you are allowed to use the funds however you would like. Since you are not using your home as collateral for the financing, the lender does not have a say in your construction plans. Having that kind of freedom during construction can save you time and money and allow you to build the accessory dwelling unit that will be best utilized for your own purposes.

To get an unsecured personal loan to pay for the construction of an accessory dwelling unit on your property, first, you should get prequalified. Getting prequalified will let you see how much your budget is and how much you can expect to pay in interest and fees during the life of the loan. A personal loan may have higher interest rates compared to other options but the freedoms it can offer may be worth the extra cost. A home improvement loan is another name for a personal loan.

To check personal loan offers you can fill out a form at Acorn Finance. Within 60 seconds you can recieve offers from top national lenders with no impact on your credit score. The ability to check offers without affecting your credit score can give you a competitive advantage. If you decide another type of loan or lender is better for your situation you simply just do not accept one of the offers you received at Acorn Finance.

Can you get a mortgage for a granny flat?

The short answer is yes, however, there are a few stipulations you should be aware of when trying to secure a home equity line of credit to build a granny flat. You will need to have a minimum amount of equity built up before you can borrow against it. Typically you need at least 10% equity in your home before you can borrow against it and if you are building an investment property or second home, then you may need at least 20%.

The next question then becomes is a granny flat an investment property. If you are building the granny flat for a relative to move into full-time, then the accessory dwelling unit could be seen as a simple addition to your existing property. If you plan to build the granny flat for the sole purpose of renting it out for a passive income stream, then you should disclose that to the bank when you are in the loan application process. If you already have over 20% equity in your existing home, then it really does not matter what your intended use is for the accessory dwelling unit.

The other stipulation that you should consider when taking out a home equity loan to pay for the construction of an accessory dwelling unit is that if you should ever get into a position where you may default on the loan, you put yourself in a position that could cost you your main residence to finance the granny flat. Just because you can take out a mortgage to build a granny flat, does not mean you should. You should make sure you are in a secure and financially stable position before ever considering a home equity loan. If you want to open a line of credit without risking your house as collateral, you could always explore your options to apply for and obtain an unsecured personal loan to finance the construction of your granny flat.

Is a granny flat a good investment?

An accessory dwelling unit is almost always a good investment. An ADU raises your property value and could provide you with an additional stream of monthly passive income.

Recently, there has been some loosening of regulations in some states that even allow for the construction of up to two ADUs on a property. If you are looking into using the property as a way to supplement your retirement income, you could rent out your house and the two accessory dwelling units as you and your spouse travel North America in your RV.

From that standpoint, constructing an accessory dwelling unit on your property would make a solid investment opportunity and the opportunities are endless.

Before constructing an ADU you should contact your local government to see what permits you need and requirements you need to meet. Building an 'illegal' ADU may decrease the value of your home as potential buyers may see it as a risk. In addition, you may get fined down the road if it's discovered that you built the ADU without proper documentation. As with any home improvement, it's important to ensure the project is done the right way to make the most of your investment.

How do I convert my garage into a granny flat?

One of the easiest conversions aside from a basement to accessory dwelling unit is a garage to accessory dwelling unit. What is nice about this conversion is that a garage will already contain electrical and water hookups as well as other infrastructure that makes the conversion simpler. The best way to get a conversion done right is to first start with a general contractor who could help you come up with some plans for what you would like your new accessory dwelling unit to look like. You will have to treat the process just like any basement finishing process and consider waterproofing, insulating, drywall, flooring, ceilings, light, etc. A garage to ADU conversion can be a fun and exciting activity that will be rewarding down the road.

Closing Thoughts

With rising health care costs combined with an increasing and aging population, it might not make sense anymore to have a parent stay in an assisted living facility where you can spend at a minimum $5,000 a month in rent alone.

A granny flat might make economic sense and have the added benefit of having your parents close in the later years of their life.

When you are ready to make the addition of a granny flat onto your existing home, it may be wise to secure financing through an Acorn Finance lending partner.

Acorn Finance has trustworthy lending partners that can offer APRs as low as 6.99% depending on your credit score. Homeowners can discover simple and competitive payment options through Acorn Finance. At Acorn Finance, you can submit one application and receive loan offers in 60 seconds or less with no impact to your credit score. Once you have claimed the best offer and finalized the loan, you can receive funds quickly.

Check granny flat financing offers with no impact to your credit score. . . apply online now!

How Does Acorn Finance Compare?

Compare Rates From Top Lenders

Granny Flat Financing Calculator

Frequently Asked Questions

Personal Loans for Granny Flats

What are the best loans for granny flat financing? 

There are different types of granny flat financing available. With needs varying, the type of granny flat financing that’s best can vary from borrower to borrower. Additionally, the cost of building a granny flat can vary widely based on materials used, size, location, and more. The amount you need to borrow can also influence the type of loan options that might work best. Most commonly, secured or unsecured loans are used. An example of an unsecured loan is a personal loan or home improvement loan. An example of a secured loan is a home equity loan. For granny flats exceeding $100,000 you may need to use a secured loan. Just as you’ll build your granny flat from the ground up, you’ll need to lay the foundation and think upstream to choose the best type of financing. 

Here’s where you can start.

  1. Define your budget: Before choosing the type of loan that works best, you should have an idea as to what your granny flat will cost. Don’t forget to include any permits or legal fees that may be associated. However, square footage will likely be the largest contributing factor to a total granny flat cost. Additional costs may arise with extra features such as wheelchair ramps, walk-in bathtubs, fireplace, patio, and more. In some cases you can build a simple granny flat for as little as $10k, but the cost can also be much higher than that. To keep your project cost on the low end, you may need to get your hands dirty with some DIY work. Gathering estimates and doing research to accurately estimate project costs can help you define how much you need to borrow. 
  2. Choose the right type of granny flat financing: There are options when it comes to getting a loan for a granny flat. If you have sufficient equity in your home, you may want to consider  a HELOC or a home equity loan. If you prefer not to use your home as collateral, or don’t have what it takes to qualify for a secured loan, you may want to consider a personal loan or home improvement loan. At Acorn Finance, you can check personal loan offers up to $100,000, depending on credit score. 
  3. Compare offers to choose the best financing option: Once you’ve narrowed down the right type of financing, you can compare offers. Some contractors may offer financing options through third-party lenders. Alternatively, you can shop local banks and credit unions or leverage the online marketplace.

How do you compare granny flat financing options?

To find the best granny flat loan for you, you can  compare offers from different lenders. Comparing secured loan options may require a bit more energy and time compared to comparing unsecured loan options. To compare home improvement loan options for granny flat financing, visit Acorn Finance. Within 60 seconds or less you can check rates with no credit score impact. 

Read More


What is granny flat financing?

Granny flat financing can be obtained via various methods, each having the same end goal of being a means to financially cover, or at least help with, a granny flat project. Granny flat financing can come from personal loans, HELOCs, home equity loans, credit cards, construction loans, builder financing, and in some cases, government grants or subsidies. Online personal loans are a common source of granny flat financing, since they can be issued in various amounts to meet the needs of the builder. Many homeowners choose personal loans to finance a granny flat for several reasons:

  • Straightforward application processes: Typically, the application process for most lenders is straightforward and can be completed from the comfort of your home. 
  • Few spending restrictions: Personal loans are, well, personal. This means that typically there are few spending restrictions surrounding your funds and how they are spent. 
  • Fast funding: Some online lenders can issue funds within one business day of approval, although funding times may vary.
  • Installment structure: Personal loans are typically repaid on an installment structure, meaning there shouldn’t be any surprises when it comes to your monthly payments. The loan is typically repaid in fixed monthly installments over a predetermined period with interest. 

How does granny flat financing work?

Exactly how granny flat financing works will depend on where you get your funding and the type of loan you use. When you take out a personal loan for a granny flat project, financing can work as outlined below. 

    1. Pre-qualify: Getting prequalified allows you to receive real offers based on your information. Oftentimes you can get prequalified without impacting your credit score. 
    2. Offer acceptance: Once you’ve found the best offer, you can accept the offer. At Acorn Finance, once you have chosen a lender, you can head over to their website and apply directly with them. You will likely need to submit verifications such as identification, proof of income, residence information, bank statements, and other documents. 
    3. Approval: Once the lender has verified your creditworthiness, they can grant you a loan approval. 
    4. Funding: Funding times may vary, but some online lenders have the ability to issue funds quickly so that you can get your project started as soon as possible. 
    5. Spending: Once you have received your funds, it is your responsibility to delegate those funds wisely. If you have a contractor you are working with, you may have the option to pay them all at once so that they can manage the project timeline and resources. You can spend the funds as needed as long as it’s within spending restrictions, if any.
    6. Repayment: You will need to repay the loan based on the agreed upon structure. Typically, repayment starts 30-45 days after the loan is funded.

When are loans for granny flat financing worth it?

As with any other home improvement project, evaluating whether or not granny flat financing is worth it for you is important. Granny flat financing can be worth it in a number of circumstances:

  • Aging relatives: Let’s not sugar coat it, nursing homes are expensive. This is a driving force for many individuals that wish to build a granny flat on their property. Having aging relatives nearby also gives peace of mind. Knowing that they are safe, cared for, and in a stable living environment gives quality of life to you and them. 
  • Gain income: Other individuals may wish to build a granny flat to rent out as a means to increase their income. In today’s tough rental market, granny flats can be a win-win for renters and landlords alike. 
  • Guest accommodations: Having friends or family over frequently can sometimes put a strain on your home environment, but having a space to accommodate them that is separate from your home can put you and your guests at ease. 
  • Flex space: Granny flats can be used as a home office, gym, “man cave”, and more. 

The perks of having a granny flat on your property are seemingly endless. To determine whether or not it would be worth it for you to invest in building one, though, is a personal decision. Compare any benefits against what the costs are and how that might affect your monthly budget. 

List pros & cons of Granny Flat Financing:

Pros and cons lists are always helpful in the decision making process. Here we have some pros and cons of granny flat financing:


  • The space that you need: Whether your granny flat would house your parents, grandparents, or simply create extra space for the members in your home, a granny flat allows you that opportunity.
  • Build credit: By making payments on time and in full, granny flat financing gives you the chance to build positive credit history.
  • Increased property value: When the appropriate permits are obtained, a granny flat can significantly increase your property value. 
  • Possible tax benefits: Depending on the intended purpose of your granny flat, as well as your location, you may be eligible for certain tax credits. 


  • Potentially negative impact on credit: Missing payments could harm your credit score and history. 
  • Zoning: Regulatory hurdles may be a turn off for many homeowners. 
  • Increased property tax: When your home value goes up, so do your property taxes.
  • The cost: Granny flat builds can be flat out expensive. Financing can add to those costs.

Why choose Acorn Finance for comparing loans for granny flat financing?

As we navigate the chaos of life, most of us appreciate ways to streamline processes. Homeowners can reduce the financial stress of building a granny flat by using a home improvement loan. Planning home improvement projects comes with enough stress as it is. At Acorn, we want to simplify the process of finding the best home improvement loan offer for granny flat financing. We’ve created a platform that allows you to check home improvement loan rates in seconds with no credit score impact. With access to top national lenders and home improvement loan offers of up to $100,000, depending on credit score, Acorn Finance empowers homeowners. If you value your time, and money, visit Acorn to find the best home improvement loan offers.

Pros and cons of lenders Granny Flat Financing:


Minimum qualifications: 

  • Minimum credit score requirement of 660 or above 
  • Minimum income requirement of $50,000/year


  • No origination fees
  • Funding as soon as one business day on approved loans, although funding times can vary
  • Competitive loan offers
  • Allows co-signer
  • Large personal loans available 
  • Flexible repayment periods up to 12 years


  • Strict qualification requirements
  • No access to pre-qualify through the LightStream website (When applying directly, you can get pre-approved but not pre-qualified, therefore, you may be subject to a hard credit pull. To get pre-qualified with LightStream, check offers through Acorn Finance to see if you qualify.)
  • No direct payment to creditors for debt consolidation loans


Minimum qualifications:

  • Minimum credit score requirement of 680 or above 
  • Minimum income requirement of $50,000/year


  • Flexible loan amounts and repayment terms
  • No origination fees
  • Competitive interest rates
  • Funding as soon as one business day on approved loans, although funding times can vary
  • Allows cosigner applications
  • Unemployment protection available


  • High credit score requirement
  • Approvals may take 3 days or more

Best Egg

Minimum qualifications:

  • Minimum credit score requirement of 600 or above 
  • No minimum income requirement 


  • Fair credit scores can qualify
  • No minimum income requirement
  • Same or next day funding available, although funding times can vary


  • Not available in some states
  • Origination fees between 0.99% and 6.99%
  • Higher APRs


Minimum qualifications:

  • Minimum credit score requirement of 600 or above 
  • No minimum income requirement 


  • Low threshold for credit score
  • No minimum income requirement
  • Flexibility to change payment dates
  • Offers peer-to-peer lending


  • Long funding times
  • Origination and late fees may apply
  • No rate discount for autopay is available
  • Restrictive repayment periods
  • Funding may take about 5 business days 


Minimum qualifications:

  • Minimum credit score requirement of 560 or above 
  • No minimum income requirement


  • Low credit score requirement
  • No early payoff penalty
  • Joint applications allowed
  • Funding as soon as one business day on approved loans, although funding times can vary


  • Origination fees between 2.9% to 8%
  • Higher APRs, especially for subprime borrowers

Axos Bank

Minimum qualifications:

  • Minimum credit score requirement of 700 or above 
  • Minimum income requirement $48,000/year


  • Low origination fees
  • Mobile app to manage loans
  • Fast funding times
  • Funding as soon as one business day on approved loans, although funding times can vary


  • High credit score requirement
  • Origination fee up to 2%

OneMain Financial

Minimum qualifications:

  • Minimum credit score requirement of 600 or above 
  • Minimum income requirement $7,200/year


  • Low credit score requirement
  • Offers secured loan option
  • Low income requirement
  • Flexibility to choose your payment date
  • Fast funding times


  • High interest compared to similar lenders
  • Origination fee between 1% – 10% (or flat fee up to $500 depending on state)


Minimum qualifications:

  • Minimum credit score requirement of 600 or above 
  • Minimum income requirement $30,000/year


  • Low origination fees
  • Relaxed credit score and income requirements
  • Same or next-day funding is available, although funding times can vary


  • No joint applications
  • High loan costs
  • Short repayment periods 

Lending USA

LendingUSA is best for one-time purchases or uses, such as cosmetic surgery financing, pet financing, funeral financing, and more. LendingUSA offers loans for a variety of industries. Loans can be obtained through the LendingUSA website or through a merchant partner that refers to LendingUSA. 

One of the main highlights of LendingUSA is their offer to pay off a loan balance within 6 months. By doing so, 

no interest will be charged to the principal. Lending USA may be better off for the details or finishing touches associated with a granny flat as opposed to the total build costs.

Reprise Financial

Reprise Financial can help borrowers find personal loan offers that meet their needs. In order to help borrowers obtain funds quickly, Reprise works to streamline the personal loan process. With customized payment options and fixed rates, check personal loan offers at Reprise Financial. 

Similar to Acorn, one of the main highlights of Reprise financial is the ability to shop and compare offers. 

Universal Credit

For borrowers with bad credit, Universal Credit may be your golden ticket to the funds you need. With a minimum credit score requirement of only 560, Universal Credit is a top choice for subprime borrowers. While loan costs may be higher, they usually are when it comes to borrowing money with bad credit. 

One of the main highlights of Universal Credit is their relaxed requirements. Bad credit borrowers often face fewer choices for loans. Finding the right lender to work with is key to getting the loan you desire.

Are you a contractor?
Generate more revenue with Acorn Finance.

Offer customers the ability to finance their dreams with zero dealer fees.

Get Started

Popular Home Improvement Projects

Barn Financing Options

One home, endless possibilities


Personal Loan Information