The short answer: Starting January 1, 2027, California cities and counties must approve two detached, newly built ADUs on a lot with a single-family home, up from one today (AB 956, Chapter 791, Statutes of 2026). A companion law, SB 1117, says impact fees on the first two ADUs can only be charged on the space above 750 square feet. The catch is financing: Fannie Mae's guidelines allow only one ADU on a one-unit property, so a second unit can change which loans fit your home. Plan the money before you plan the floor plan.
What did Governor Newsom sign, and when does it take effect?
On September 29, 2026, the Governor signed a large package of housing bills. Two of them matter directly to homeowners thinking about a backyard unit:
- AB 956 (Quirk-Silva), Chapter 791. It requires a local agency to ministerially approve two detached, new-construction ADUs on a lot with an existing or proposed single-family home. Under current law, the guaranteed path is one detached ADU, with side and rear setbacks of up to four feet and a size the city may cap at no less than 800 square feet of living space (Gov. Code § 66323). If you build two detached ADUs, the city doesn't also have to approve a junior ADU (JADU) on that lot, which keeps the total at four homes per parcel (Senate Floor Analysis, Aug. 2026).
- SB 1117 (Cervantes), Chapter 809. ADUs of 750 square feet or less already pay no impact fees. For larger ADUs, the new law says the fee can be based only on the square footage above 750, for the first two ADUs on a lot (CalMatters Digital Democracy: SB 1117).
Neither bill is an urgency measure, so both take effect January 1, 2027, under the state constitution's default rule for regular-session statutes (Cal. Const., Art. IV, § 8). AB 956 doesn't include a special transition rule, so if you're designing now, ask your city which rules will apply to your application.
California ADU rules on a single-family lot: now vs. Jan. 1, 2027
| Through Dec. 31, 2026 | Starting Jan. 1, 2027 | |
|---|---|---|
| Detached new ADUs a city must approve | One | Two |
| Junior ADU also guaranteed | Yes | No not required if two detached ADUs are built |
| HOA can't block a qualifying ADU | Yes lots zoned for single-family use | Yes lots zoned to allow single-family use |
| Impact fees on a 750 sq ft or smaller ADU | No | No |
| Impact fees on a larger ADU | Proportional; some cities charge on the whole unit | Only on the space above 750 sq ft (first two ADUs) |
Can my HOA stop me from building an ADU?
Generally, no, if the ADU meets state law. California already voids HOA rules that prohibit or unreasonably restrict ADUs on lots "zoned for" single-family use. The Senate analysis noted that this wording left a gap: some HOAs could argue it didn't cover single-family homes on land zoned for more than one unit. AB 956 changes the wording to lots "zoned to allow" single-family use, closing that gap (it amends Civil Code §§ 714.3 and 4751) (Senate Floor Analysis; LegiScan: AB 956). Reasonable HOA design rules can still apply, so read your CC&Rs before you hire a designer.
Who supported AB 956, and what were the concerns?
Supporters, including California YIMBY, the California Apartment Association, LeadingAge California and Zillow, argued it adds housing on land owners already have and ends confusion about how many ADUs a lot can hold. Opponents, including the League of California Cities, the California Fire Chiefs Association and about 17 cities (among them Burbank, Thousand Oaks and Torrance), argued it doesn't account for local water, sewer, power and road capacity. The bill passed the Assembly 60–2 on final concurrence and the Senate 27–6 (Senate Floor Analysis; LegiScan). Expect cities to keep enforcing fire, utility and building code requirements on each unit.
How much could SB 1117 save on impact fees?
It depends on your city's fee schedule. Today, some jurisdictions charge the full per-square-foot fee on an ADU's entire size once it goes over 750 square feet. Under SB 1117, only the square footage above 750 counts. The bill's sponsor estimates the old practice can add more than $8,000 to a project where impact fees run over $10 per square foot (California YIMBY SB 1117 fact sheet; that's an advocate's estimate, not an official figure). School fees and utility connection charges are separate, so ask your city for a full fee estimate.
Can I get a mortgage on a home with two ADUs?
This is the part almost nobody talks about. Fannie Mae's Selling Guide says, plainly: "Only one ADU is permitted on the parcel of the primary one-unit dwelling." It also says ADUs aren't permitted with a two- to four-unit dwelling, and that the appraiser decides how to classify the property based on its characteristics, such as separate utility meters, a separate address, and whether the units can be legally rented (Fannie Mae B2-3-04).
What that means in real life:
- A home with one main house and two ADUs may not fit a standard conforming one-unit loan. Depending on how the appraiser classifies it, it could be underwritten as a two- to four-unit property, or it may need a non-agency (portfolio or jumbo) loan. Each path has its own down payment, reserve and pricing rules.
- This affects you later, too. When you refinance, take a HELOC, or sell, your buyer's lender faces the same question. A second ADU can add value and rental income, but it can also narrow the pool of loans for the property.
- ADU rent can still help you qualify, within each program's limits. I covered how lenders count ADU rent in my ADU guide.
Guidelines change, so check with your lender before you break ground, not after.
Should I use a HELOC or a cash-out refi to build an ADU right now?
For most owners with a low first-mortgage rate, a HELOC or renovation loan keeps that rate in place. Freddie Mac's national average for a 30-year fixed was 7.32% the week of October 22, 2026, down from 7.40% the week before (Freddie Mac PMMS via GlobeNewswire, Oct. 22, 2026). That's a national average for borrowers with 20% down and excellent credit, not a quote. If your current rate is well below that, replacing the whole mortgage to fund a backyard unit usually costs more than it saves. My HELOC vs. cash-out refinance guide walks through the trade-offs.
Outside California? These rules apply only to California properties; other states and cities set their own ADU rules.
Derek\'s take
In 20 years and more than 1,200 loans, I've seen families in the San Gabriel Valley use ADUs to keep grandparents close and give grown kids a start. Two detached units on one lot opens real possibilities, especially on the deeper lots we have around San Marino, Arcadia and Pasadena. My one piece of advice: talk about financing before you pay for plans. Whether your property stays a "one-unit with an ADU" or becomes something lenders treat differently can shape your loan options for years. If you're weighing a second ADU, book a call with me and we'll map it out. Thirty minutes, no credit pull, no obligation.
Frequently asked questions
When can I build two detached ADUs in California?
AB 956 takes effect January 1, 2027. After that date, cities must ministerially approve two detached, new-construction ADUs on a lot with a single-family home. If you apply before then, ask your city which rules will govern your application.
Can I still build a junior ADU if I build two detached ADUs?
Your city isn't required to approve a JADU on a lot that has two new detached ADUs, which keeps the total at four units. Some cities may allow more under their own ordinances.
Does SB 1117 eliminate ADU impact fees?
No. ADUs of 750 square feet or less were already exempt. For larger ADUs, SB 1117 limits the fee to the square footage above 750 square feet, for the first two ADUs on the lot. School fees and utility connection fees are separate.
Will a second ADU affect my mortgage or refinance?
It can. Fannie Mae allows only one ADU on a one-unit property, so a home with two ADUs may need to be financed as a two- to four-unit property or with a non-agency loan. Ask a lender before you build.
This article is general education, not legal, tax or investment advice, a commitment to lend, or an offer of credit. Local ADU ordinances vary; confirm requirements with your city or county planning department.
Sources
- LegiScan: California AB 956 (2025–2026), status and history (Chapter 791, Statutes of 2026)
- California Senate Floor Analysis of AB 956 (Aug. 17, 2026)
- CalMatters Digital Democracy: AB 956
- CalMatters Digital Democracy: SB 1117 (Chapter 809, Statutes of 2026)
- California YIMBY: SB 1117 fact sheet (Aug. 2026, sponsor)
- California Government Code § 66323
- California Constitution, Article IV, § 8
- Fannie Mae Selling Guide B2-3-04: Special Property Eligibility Considerations
- Freddie Mac: Mortgage Rates Decrease to 7.32% (Oct. 22, 2026)
This article is general education, not a commitment to lend, an offer of credit, or tax, legal or investment advice. All loans are subject to credit approval, income and asset verification, and property appraisal. Programs, rates, terms and limits change without notice; figures are current as of the publish date. Derek Shao, NMLS #242117, CA DRE #01358261. Financial Dynamics, Inc. DBA Emory Financial, Company NMLS #393986. Equal Housing Opportunity.
