Budgeting & Finance

Your budget drives your ADU project. You will balance design with what you can afford, and make sure to consider expected rental income. Once you know what you can build, review your finances before hiring a design team.

Estimate project budget
Learn about financing options using our Financial Feasibility Tool
Understand property tax and home value impacts

Project Timeline

Budgeting is part of the Planning phase, which typically takes the first 1-2 months. The entire ADU project can take as little as 6 months to complete or as long as 18 months in a larger city or with a complicated project. Check with your city or town’s building department to confirm timeline for your specific project.

FAQs

Here are a few of the most frequently asked questions about budgeting and finance:

How much does it cost to build an ADU?

The following are rough estimates for various kinds of projects, including site work and construction:

Project Type	Typical Cost Range
2BR Detached ADU	$250,000-$450,000
Studio Detached ADU	$200,000-$300,000
2BR Attached ADU	$235,000-$360,000
Interior Conversion ADU	$120,000-$270,000

The final number can vary widely and depends on many factors including:

ADU size and type
Design features and fixtures
Site conditions (slope, fire access, foundation complexity, utility connections)
Septic and stormwater details
Geographic location (urban vs. rural, specific location policies)

See the Budgeting page for more detailed information on typical cost ranges and financing.

Can I build an all-electric ADU? What should I know about it?

There are many benefits to building an all-electric ADU, including improved indoor air quality, lower environmental footprint, and easier integration with renewable energy technology. An all-electric ADU tends to cost less upfront than a similar ADU with a gas hookup, because extending a gas line to an ADU can be expensive and complicated.

You may look into the following technologies for heating, cooking, and hot water in your ADU:

Building an all-electric ADU also makes you eligible for between $15,000-25,000 in incentives from Mass Save. ADUs that use propane, oil or gas for heating, cooking or hot water are not eligible for incentives. If you want to offset electrical loads with renewable energy, you might be able to add solar panels (see more about solar electricity here).

How am I going to pay for an ADU?

Many homeowners use a mix of options to finance their ADU, including savings, funds from family, and/or loans. It is strongly recommended that your financing is in place before construction starts. Be sure to factor in potential rental income since that will help you repay loans. Our Financial Feasibility Tool (part of the ADU Wizard) can help you assess financing options with real-time calculations and estimate rental income.

Building an all-electric ADU also makes you eligible for between $15,000-25,000 from Mass Save’s new construction incentives, with additional money for clean energy technologies such as heat pump water heaters and induction cooktops.

MassHousing’s Accessory Dwelling Unit Loan Program offers income-eligible borrowers a financing path for adding an additional unit to their single-family property. The program helps homeowners build ADUs by offering a fixed-rate second mortgage product at a lower interest rate and higher combined loan to value limits than are currently available through a home equity line of credit.

What if I don’t have a lot of money available right now to build an ADU?

There may be financial products available to help you. If you have equity in your home, a traditional cash-out refinance or home equity loan/line of credit (HELOC) might work for you. Our Financial Feasibility Tool (part of the ADU Wizard) can help you assess financing options with real-time calculations and estimate rental income.

Other financial products that may be available to you include:

If you have a disability or a household member who is over 60, you may also qualify for the State’s Home Modification Loan Program.

See more details on the Budgeting & Finance page.

How will building an ADU affect my taxes and property value?

Adding an ADU will affect your property taxes and the resale value of your home. The exact amount is dependent on a variety of factors unique to your property, including but not limited to your location, size of the ADU, and type of ADU (detached, attached, internal). Please contact your local assessor’s office or trusted real estate advisor to learn more.

Can I eventually sell my ADU separately from the main building?

Condominium conversions are governed by Massachusetts General Law Chapter 183A, which is not regulated or amended by the new ADU law. Massachusetts Property owners outside of Boston should speak to a trusted legal or real estate expert to discuss what options might be available. In Boston, ADUs can typically be sold separately. Check with your municipality to confirm.

Can I rent out my ADU?

Yes! Renting out your ADU is a great way to generate additional income and provide housing for your community. For more information and support, see Move-in & Renting.

Note that short-term rentals (AirBnBs and VRBOs) may not be allowed in your location or may be subject to additional regulations.

How much does it cost to design an ADU?

Design costs cover the work of your architect or designer and may or may not include engineering, surveying, and other professional services necessary to prepare for permitting. Together, these services may total around 10-20% of your total project budget – the exact amount depends on the details of your property and project. See the Budgeting and Finance page for more details.

How much does it cost to get permits for an ADU?

ADUs can be charged a variety of fees from your local government, the State, and other agencies. Some fees are based on details of the project while others are fixed. The total amount depends highly on your property and plans, but Planning staff can most likely provide an estimate once you have a good idea of your project details.

See the Budgeting and Finance page for more details.

How to Budget and Choose Financing

Keep in Mind: Initial cost estimates are likely to change as you move through the process, and you won’t know what it will truly cost until you talk to a professional. Current workforce and supply chain disruptions are causing prices to move up and down more quickly than usual. If you have a tax or financial advisor, it is always good to check in with them early on too.

In the Pioneer Valley?

Pioneer Valley ADU Accelerator provides technical support for homeowners that are interested in building an all-electric, modular or panelized detached ADU in the Pioneer Valley.

STEP 1 Estimate Project Cost

It’s never too early to start thinking about and planning for your project budget. A very rough placeholder for you to use is $250-500 per square foot, including construction and other costs (design, fees, etc.). The real number can vary widely and depends on many factors including:

ADU size and type
Design features and fixtures
Site conditions (slope, fire access, foundation complexity, utility connections)
Septic and stormwater details
Geographic location (urban vs. rural, specific location policies)

The following are rough estimates for various kinds of projects, including site work and construction:

Project Type	Typical Cost Range
2BR Detached ADU	$250,000-$450,000
Studio Detached ADU	$200,000-$300,000
2BR Attached ADU	$235,000-$360,000
Interior Conversion ADU	$120,000-$270,000

Development Costs ("Soft costs")

“Soft costs” include the planning and preparation for your project. Also called pre-construction costs, they can include (but are not limited to) fees for:

Design (architect/designer)
Engineering (structural, civil, geotechnical)
Assessments and surveys
Permitting

Soft costs typically aren’t covered by a construction loan, so need to be either self-funded or paid for with financing like a grant, refinance, or second mortgage.

Design fees cover the work of your design team and vary with every project. Clarify what costs are and are not covered by your contract with your design team (including surveying, engineering, and others).

Permitting fees are charged by your local government, the State, and other agencies. Some fees are based on the details of the project while others are fixed. Some of the most expensive fees may not be controlled by your local planning and building departments.

The fees listed below are often required, but the exact list of fees and when they are due will vary depending on where you live. Contact local staff for more information. Fees may include:

Zoning review and permit fees
Building review and permit fees (generally due when your permit is issued)
Other department fees (staff will let you know what applies to your project)
Development impact fees
Utility and sanitation fees, including utility connection fees (contact utility agencies as you develop the design for your ADU for more information)

See the Permitting page for an overview of permits.

Construction costs (“Hard costs”)

ADU construction costs (“hard costs”) vary significantly depending on materials, site conditions, and other factors. Hard costs are typically 85% of your total project budget, and can range from $70,000 for a simple interior conversion to $500,000+ for a large detached ADU with high-end finishes on a hillside lot.

Despite what many think, smaller ADUs may cost almost the same as larger ones. Many costs like foundation, kitchen and bathroom work only increase slightly for larger ADUs. Kitchen costs will range from $25,000–$50,000 with each bathroom ranging from $15,000–$25,000.

New construction, both detached and attached, tend to be the most expensive. Garage conversions are not much less expensive than new construction, if at all. Interior renovations where space already has a bathroom, kitchen, and heating/cooling tend to be the least expensive to convert to an ADU.

Other factors:

Quality of interior finish work and amenities
Architectural form and details
Extent of utility, structural, mechanical, electrical, and plumbing upgrades required
Required site upgrades (sidewalks, sewer and water)
Whether sprinklers are required
Whether doors and windows meet emergency exit standards
Lot complexity (slope, trees, fault lines, etc.)

Resources

STEP 2 Assess Financing Options

Many homeowners use a mix of options to finance their ADU, like their own savings and assets, funds from family, and/or loans. It is strongly recommended that you do not begin construction without your financing plan in place. Be sure to factor in potential rental income since it will be a source for repaying any loans.

Our Financial Feasibility Tool (part of the ADU Wizard) can help you assess financing options with real-time calculations and estimate rental income.

Tip: Start by talking to your mortgage lender to see if they offer a home equity line of credit (HELOC) or ADU new construction loan that could work for you.

Financing options include:

Cash savings or other liquid assets
Loans from family or friends
Home Equity Line of Credit (HELOC)
Equity Loan
Construction Loan
Cash-out Refinance

Use the Financial Feasibility Tool to understand what monthly payments might look like for these options.

There may be local or state financial opportunities to help you as well! Keep an eye out for new opportunities as they come online.

Current ADU Financial Resources

Mass Housing Partnership’s (MHP) ADU Incentive Program will provide technical assistance and financial aid to eligible property owners looking to construct an ADU on their property. Beginning in Spring 2026, Phase 1 will focus on helping homeowners get started by providing access to professional feasibility studies.
MassHousing’s Accessory Dwelling Unit Loan Program provides income-eligible homeowners with affordable financing to add an additional unit to their properties.
Boston Home Center’s ADU Financial Assistance Program offers grants and loans to help with the costs of ADUs in Boston, and recipients are also eligible for and encouraged to apply for additional financing with established partner lenders.
Mass Save Residential All-Electric Incentives Program offers between $15,000 and $25,000 for energy efficient all-electric construction, coordinated by your builder with a HERS rater as part of complying with energy code requirements.
Home Modification Loan Program (HMLP), led by the Community Economic Development Assistance Corporation (CEDAC), provides no interest loans to homeowners who have a household member with disabilities or who is over the age of 60 to make necessary accessibility renovations.