Get preapproved for ADU loans and financing through one of the contractors in our network.
Realize your dreams of adding an in-law unit, rental ADU, granny flat, or secondary apartment. Renovate connects you with top contractors in your area who offer ADU financing.
Ready to maximize your lot to accommodate more people?
Get started by requesting an ADU construction loan
to see your on-screen results for financing an ADU.
How to Get ADU Financing
Step 1
Submit personal, financial, and project information directly on Renovate.com to start your ADU financing request.
Step 2
Your request will be reviewed in real-time, and a pre-qualified offer may be presented on-screen.
Step 3
After selecting the offer, you will be redirected to complete the ADU financing application.
Step 4
If approved, the ADU contractor can begin work immediately while you pay the financing company in installments.
What is an ADU Loan?
An Accessory Dwelling Unit (ADU) loan is a way for homeowners to finance the construction or renovation of an independent living space on the same property, such as a detached guest house, converted garage or basement, or added story.
Loan Amount: $100,000
APR: 5%
Loan Term: 15 years (180 months)
The formula for calculating the monthly payment is: M = P(1+r)n/(1+r)n - 1
- M = Monthly payment
- P = Principal loan amount ($100,000)
- r = Monthly interest rate (APR/12) (0.05/12 = 0.004167)
- n = Total number of payments (15 years x 12 months = 180)
Using this calculation, a homeowner who takes out an ADU loan of $100,000 with an APR of 5% and a 15-year repayment term will incur a monthly payment of about $659.96.
Types of Accessory Dwelling Units You Can Finance
Our ADU contractors are the best in the business at building the following types of secondary residential structures:
- Detached ADUs: A detached structure on the same lot as the primary residence, usually located in backyards or other parts of the property.
Examples: Small guest houses, tiny homes, backyard cottages
- Attached ADUs: A physically-connected addition made to the existing home that has a separate entrance.
Examples: In-law suites, studio apartments, attached above-the-garage conversions
- Garage Conversions: An existing garage that is transformed into a living space, often by installing a kitchen and bathroom.
Examples: Detached garage apartments, attached garage studios
- Basement Conversions: A basement of the principal dwelling that is converted into a separate living unit with private entry.
Examples: Basement apartments, in-law suites
How Much Does an ADU Cost?
Building an ADU averages between $60,000 and $285,000. Free-standing units constructed in cities with high labor and material costs can reach $360,000. The overall cost of an ADU depends on where you live, the size of the desired ADU, labor fees, and the materials used.
Most ADUs fall between 330 and 1,250 square feet and cost between $160 and $300 per square foot to build after factoring in materials, labor, and design. Budgets can exceed $600 per square foot for more complex projects. The table below includes ADU construction cost estimates by type of dwelling, which we derived from leading industry sources:
ADU Costs
| Type of ADU | Average Cost Range |
| Detached new construction | $110,000 - $285,000 |
| Basement ADU conversion | $74,000 - $150,000 |
| Garage ADU conversion | $60,000 - $226,000 |
| Attached ADU | $75,000 - $216,000 |
ADU Maintenance & Systems Costs
| Type of ADU | Average Cost Range |
| Landscaping maintenance (mowing, weeding) | $100 - $375 per visit |
| Property tax | Added tax on assessed value of ADU |
| HVAC system | $5,000 - $12,500 |
| Plumbing system | $60,000 - $150,000 |
| Running electricity | $900 - $1,300 |
Common ADU Problems
We can help you avoid common ADU problems by connecting you with an experienced contractor. Here are some of the pitfalls they will guide you through:
- Approvals and permitting fees are time-consuming and costly. While most states permit ADUs, varying local city and county regulations can make it difficult to meet development standards. Ignoring regulations for ADUs can trigger expensive delays and fines. Renovate's best-in-class contractors will help navigate you through the permitting process.
- Local design constraints can complicate the construction process if the municipality enforces specific zoning and building guidelines like lot size and setbacks, height limits, exterior guidelines, and utility connections. Even the layout of the lot and its topography can influence design. Our contractors bring the top-notch architectural and engineering expertise often required for new construction ADUs.
- Securing financing to fund the building cost can be a hurdle, given how expensive ADUs are. How much the ADU costs could delay your plans when you do not have the resources to pay for the project upfront. That's why we only work with contractors who offer a financing option.
Factors to Consider When Building an ADU
Adding an ADU to your property can help you accommodate additional guests without making a big move to a larger home. There's a lot to think about before breaking ground on a new ADU. Fortunately, our expert contractors know the ropes. Here’s what they will help you consider before you get started:
Access Points
One requirement of accessory dwelling units is that they must have their own entrance separate from the primary residence. Depending on the ADU being built, our contractors will determine how much of the budget should be allocated toward additional walkways, driveways, or stairways.
Also, consider who will be using the space. If the guests are elderly, you might consider making accessible accommodations such as wheelchair ramps, handrails, wider doorways, and more for better mobility.
Purpose and Privacy Level
Understanding how you will use the ADU will heavily influence the direction of its design. That’s why our contractors will start by discussing your main goals for the project. For example, an attached ADU on the ground level might be more suitable for homeowners who want to keep an eye on aging parents. Meanwhile, unrelated renters might be more drawn to detached structures that offer some degree of separation from the main residence.
Whether you invite in-laws or subleasers into the ADU, our contractors will prioritize privacy during the design phase to create separate living spaces unique to each dwelling. Window blinds, landscaping, and fencing can help create peaceful retreats that are also aesthetically pleasing.
Energy Efficiency
Adding another structure to your property will greatly affect utility bills and energy usage. Our experienced contractors can help you construct an energy-efficient unit that not only keeps utility bills low but also reduces the impact on the environment. Think green with sustainable building materials, high-efficiency windows, insulation, and ENERGY STAR-certified appliances.
Allow your contractor to suggest ways you can add renewable energy sources like solar panels to reduce energy consumption during the planning phase and throughout the project. Plus, some eco-friendly upgrades are eligible for a tax credit.
Design and Aesthetic Compatibility
We know that to generate the most equity and enhance property value, you must ensure the design of the ADU complements your existing property. Our contractors take extra care to blend the materials, structure, and overall appearance with the main home.
Effects on Property Value
Building an ADU can either profoundly raise or lower your property’s value. A well-designed ADU can increase the general value of the property. On the other hand, a poorly done ADU or one that doesn’t meet the code may lower property value or inhibit resale.
Rest assured, our trusted, reputable building professionals will create a space that generates a return on investment and serves your needs both now and in the future.
Financing Options
You may use a HELOC, cash-out refinance, renovation, or construction loan to fund your project. These options have different terms, interest rates, and repayment schedules, so consider your financial situation and consult a financial advisor to understand loan implications.
After securing the ADU loan, you’ll need to hire a contractor. Renovate can connect you with experienced contractors that offer flexible private financing, so you can get started building faster.
Benefits of ADU Financing with Renovate
Renovate streamlines the process of locating ADU financing. Here are some additional benefits of getting preapproved for ADU loans with Renovate:
Competitive Rates
Renovate’s contractors offer financing options through a network of financial institutions. These options offer competitive interest rates, flexible loan amounts, and multiple terms, so you can choose a loan that fits your budget and project size.
Large Merchant Network
Renovate connects owners with reputable ADU contractors and direct financing options. Our solution connects you with both a top-ranked ADU contractor and a flexible financing solution.
Inclusive Credit Solutions
Our diversified lender network opens more financing opportunities to property owners with different credit profiles. Your credit score does not have to be perfect to secure funding for your ADU project.
Streamlined Digital Loan Application
Submitting your request for ADU financing is quick, easy, and done entirely online. Include some basic information about yourself, your finances, and your project. Based on your provided information, you may get a pre-qualification offer in minutes.
