Explore Your ADU Financing Options
Not Sure How You’ll Fund Your ADU? You Have Options.
Building an accessory dwelling unit can create valuable new space for aging parents, adult children, guests, caregivers, or future rental income. However, determining how to pay for the project can feel like one of the most difficult parts of getting started.
The good news is that homeowners may have several financing options available. Republic Building Contractors can help you understand the potential cost of your project, develop a realistic construction plan, and gather the information you may need when speaking with a lender.
Common Ways to Finance an ADU
01
Home Equity Line of Credit
A home equity line of credit, commonly called a HELOC, provides access to a revolving line of credit secured by your home.
Rather than receiving the entire amount at once, homeowners can draw funds as construction progresses. This can be helpful for projects with several phases or payments.
HELOCs frequently have variable interest rates, so monthly payments and borrowing costs may change over time.
02
Cash-Out Refinancing
With a cash-out refinance, you replace your current mortgage with a new, larger mortgage and receive the difference in cash.
This may provide enough funding for a major ADU project, but it also changes the terms and interest rate of your primary mortgage. Homeowners should carefully compare the new loan with their existing mortgage before moving forward.
03
Construction or Renovation Loan
Certain lenders offer loans specifically designed for new construction, additions, and major renovations.
These loans may release funds in stages as work is completed and inspected. Because requirements can be more detailed than a traditional home equity loan, homeowners may need to provide approved plans, permits, contractor information, a construction agreement, and a payment schedule.
The 2026 Massachusetts ADU Loan Program
Massachusetts homeowners may also be eligible for financing through the MassHousing Accessory Dwelling Unit Loan Program, or ADULP.
The program was introduced to help eligible low- and moderate-income homeowners finance the construction of an accessory dwelling unit on the property they own and occupy as their primary residence.
Program Highlights
The MassHousing program currently offers:
- Financing of up to $250,000 for a detached ADU
- Financing of up to $150,000 for an attached ADU
- A fixed-rate, interest-bearing loan combined with additional zero-interest, deferred-repayment financing
- A 20-year repayment structure for the interest-bearing portion
- Financing specifically intended for ADU construction costs
Program loans are provided through participating MassHousing lenders, and income limits vary based on the location of the property.
Frequently Asked Questions
Does Republic Building Contractors provide financing?
No. Republic Building Contractors is not a lender and does not provide loans or financial advice. We can provide project planning, estimates, construction documents, and other information you may need when discussing financing with a qualified lender.
Do I need financing approval before contacting you?
No. You can begin exploring your ADU before selecting a financing option. Developing an initial scope and budget can help you determine how much funding you may need.
Do you handle permits and zoning?Can projected rental income help me qualify for financing?
Some lenders may consider potential rental income when evaluating an ADU loan application, but policies vary. Discuss this directly with a participating lender or mortgage professional.
Can I use the Massachusetts program for an ADU project that has already started?
Under the current MassHousing program requirements, projects that begin construction before the financing closes are not eligible.
Does the Massachusetts program pay for design and permitting?
Certain project-related soft costs may qualify when they are directly connected to the ADU, but the project must generally be fully planned and ready for construction before the MassHousing loan can be finalized. Homeowners should confirm eligible expenses with a participating lender.
How do I know which financing option is best?
Consider the total project cost, available home equity, current mortgage rate, monthly payment, loan term, closing costs, and your plans for the ADU. A qualified lender or financial professional can help you compare the available options.
Financing programs, eligibility requirements, income limits, interest rates, loan terms, funding availability, and participating lenders are subject to change. Republic Building Contractors is not affiliated with MassHousing, the Massachusetts Housing Partnership, or the Commonwealth of Massachusetts and does not guarantee program eligibility or loan approval.
Calculate The Cost of Your ADU
Ready to see what an ADU would cost for your home? Use our free calculator to learn more.
Calculate The Cost of Your ADU
Ready to see what an ADU would cost for your home? Use our free calculator to learn more.