I downsized to an ADU I built in my Sacramento yard. I pay only $520 toward my mortgage and am saving up for my next home.

• Blanca Barragan rents out rooms in her home for extra income, earning $55,780 since 2019.
• In 2023, she began building an accessory dwelling unit in her yard and moved into it in April.
• Renting out her entire main home, she's saving hundreds every month, with plans to buy more homes.

This as-told-to essay is based on a conversation with Blanca Barragan, a 42-year-old electrician, who completed construction of an accessory dwelling unit she built in her front yard and moved into in April. The essay has been edited for length and clarity.

I bought my home in Sacramento seven years ago for $150,000; it's small, 583 square feet. Even back then, there weren't many available in the city at that low of a price.

At the time, almost all of the homes on my block were abandoned, and there were many empty lots. When I bought my home, it looked like it was falling apart; everybody was telling me I shouldn't buy it and instead wait until I could buy something in a better neighborhood.

Things have changed a lot since then. They've remodeled all the houses in my neighborhood and have built homes on the empty lots.

I fixed up my home with the help of Habitat for Humanity and by 2019 I began house hacking.

My home was meant to have two bedrooms and one bathroom. But I sacrificed my master bedroom and converted it into a separate micro studio that I now rent out.

I also got very creative and turned the pantry area into a room, and another room in my house that was supposed to be an office, into a bedroom. Additionally, I repurposed a 120-square-foot shed into a micro studio.

Over the last four years, I've made $55,780 from renting out the micro studios in my home. The money I've made has helped me buy my eldest son a $360,000 house that I'm also the co-mortgage owner of, and qualify for a loan to add an ADU to my property.

In April, I moved into the ADU with my youngest son. Living there while renting out the main house is saving me about $2,200 each month. I plan to use that money to buy more properties.

The grant approval process was pretty straightforward

I always wanted to buy another house but knew I couldn't afford it. Instead, I decided to expand my existing property since I had a huge front yard and my home was pretty small.

I told all of my friends about my dream to build an additional house on my lot. One of them sent me an advertisement for CalHFA's ADU grant program that gives eligible Californians $40,000 to cover blueprints, permits, and closing costs to build an ADU on their property.

In 2022, I began the process of getting approved for the CalHFA's ADU grant, which was pretty easy.

The advertisement I was sent explained all the steps I needed to take and also provided a list of lenders that could work with me. This is because, to qualify for the grant, you have to simultaneously qualify for a traditional loan for the ADU.

Because I couldn't find someone who would finance the ADU separately — those loans were way too expensive for me — I chose to refinance my existing mortgage with Envoy Mortgage.

My lender contacted Anchored Tiny Homes for a cost breakdown of the project, which was about $30,000, including pricing for permits and a blueprint. They then submitted those numbers plus their closing cost estimates to CalHFA to obtain the grant. I was approved and the $40,000 grant was sent directly to my lender, which approved my new mortgage.

Because the property value continued to increase each year since buying my home in 2017, I refinanced my 30-year fixed mortgage a few times before I started my ADU project. So I now have 28 years left on a $460,000 loan at a 4.8% mortgage rate that includes my existing home and the ADU.

I moved into the ADU — it's saving me hundreds monthly

Construction for my ADU began in April 2023 and took a year and eight months and was completed just about three weeks ago. It has two bedrooms and one big bathroom.

Overall, it cost $220,000 to build, which was higher than I anticipated. I had expected the closing costs to be around $5,000 to $6,000, but they ended up being almost $30,000. I believe they were higher because the lender had to oversee the contractor's work and administer the loan throughout the construction process.

Although I received the $40,000 grant, I had to borrow the rest of the money from my lender. As a result, my mortgage, including my main house and ADU, increased by $1,500 a month — from $1,200 to $2,700.

There are two renters living in the main property and my son and I moved into the ADU. (The little shed that I was previously renting out had to be torn down when I built the ADU.)

The main home's primary bedroom — the one I turned into a micro studio — is renting for $875.  I'm charging the other tenant for the remainder of the house $1,305. Living in the ADU with my son, I only pay $520 of the $2,700 mortgage. The tenants cover the rest.

I love living in my ADU, and my son likes it a lot too. Everything is clean, white, and brand new, including our dishwasher, washing machine, and dryer.

The ADU has inspired me to buy more real estate

With housing being so expensive right now in California, homelessness is widespread. There are tents on many streets; it's very sad.

Everyone is searching for affordable housing, even my family. That's why I had the idea of sacrificing living in a larger space and moving into a small one.

I like to know I'm helping people, and if anyone in my family ever needs to move somewhere in an emergency, I have housing for them.

I had zero extra dollars when I started this project, I just sketched it out and put it on paper. Building this ADU is beautiful to me because I now feel like anything I dream can happen.

The whole thing has impacted my children's, friends', and neighbors' lives because they all saw it happen out of nothing.

I have developed a lot of big dreams because of this: I wrote a 20-page booklet to teach others how to build an ADU, and I'm already thinking about the next property I want to buy.