If you’ve looked into building a tiny home in your backyard, you’ve probably discovered what many have: While they may save you money in the long run, they can be expensive to build.
These backyard homes, called accessory dwelling units, or ADUs, are small housing units ranging from 150 square feet to 1,200 square feet, depending on where you live.
The average cost of a unit can range from $100,000 to $300,000, not to mention the cost of the permit, and it can be difficult to get a loan to build an ADU.
In California, where most backyard homes are being built, ADU building permits cost anywhere from $450 to $15,000 — even before construction starts, Backyard Unlimited, a company that builds ADUs, said.
That’s not all: Other costs could include site preparation, which includes anything from inspections to running utility lines.
All this to say, if you don’t have cash lying around or the ability to access financing for the project, it can be cost prohibitive — making it harder for middle- and low-income homeowners to actually build one, studies have shown.
To combat this disparity, promote equity, and ultimately propel the construction of much-needed housing, some states — and nonprofits in some cities — have created grant programs to help.
The deadlines for these programs vary from state to state. Those interested in building an ADU should be prepared for next year’s application cycles, as they often experience high demand.
Here are the ADU programs available nationwide.
California: Up to $40,000 per grantee
The funding for 2024 has already been allocated. The state previously provided $40,000 to Californians for pre-construction ADU costs, such as design, permitting, and soil inspections. In 2024, several legal changes were made regarding ADU size, owner occupancy requirements, and more.
Who can apply? Californians that fall in the range of low- to moderate-income limits.
Total funding available: $100 million was allocated in 2021, but by 2023, the money had been fully distributed. The program’s funds were infused with $25 million in grant funding for 2023 to 2024, but those have also been fully allocated.
When are applications open? The program is no longer accepting applications for 2024, and applications for 2025 have not yet been announced.
Requirements:
Agency or Department in charge of distribution: California Housing Finance Agency
New York: Up to $125,000 per grantee
The Plus One ADU Program provides eligible New Yorkers up to $125,000 to build or convert an ADU on their property.
In 2024, as part of Mayor Eric Adams’s ‘City of Yes’ housing initiative, New York State legalized permitting ADUs on one- and two-family residential properties in low-density housing districts. However, whether a locality in New York allows ADUs depends on its land use and zoning regulations.
Who can apply? Homeowners who meet the income requirement of 100% or below the area median income.
Total funding available: The 2022-2023 NYS Capital Budget provided $85 million for the Plus One ADU Program over the next five years. Of the total, $60 million has been distributed across 50 municipalities, with the remaining $25 million available through a competitive RFP.
When are applications open? There are 50 participating localities, all accepting homeowner applications on a rolling basis.
Requirements:
Agency or Department in charge of distribution: New York State’s Homes and Community Renewal
Vermont: Up to $50,000 per grantee
This program allows Vermonters to receive up to $50,000 to build an ADU on their property. Both landlords and owner-occupied homes with plans to rent are eligible.
Who can apply? Any Vermont homeowner can apply through these five regional organizations: RuralEdge, Champlain Housing Trust, NeighborWorks of Western Vermont, Downstreet Housing and Community Development, and Windham and Windsor Housing Trust. These organizations review applications and oversee projects.
Total funding available: As of 2023, Vermont had a $15 million budget.
When are applications open? Open now, on a rolling basis.
Requirements:
Agency or Department in charge of distribution: Vermont Housing Improvement Program
Colorado: A new grant program still rolling out
In 2024, Colorado passed HB24-1152 to assist homeowners in building ADUs.
Who can apply? The Accessory Dwelling Unit Fee Reduction and Encouragement Grant Program will offer down payment assistance, low-interest loans, and interest rate reductions to eligible low—and moderate-income Coloradans building ADUs.
Total funding available: The General Assembly allocated $5 million for the program. Currently, grants are available to “accessory dwelling unit supportive jurisdictions,” meaning local governments actively supporting ADU development. The Department of Local Affairs will manage the grant program created by the bill.
When are applications open? It has not yet been announced when applications will open to local governments or residents.
Requirements: The qualification requirements are still being finalized.
Agency or Department in charge of distribution: The Department of Local Affairs, Division of Local Government
Have you built an ADU on your property? We want to hear from you. Email the reporter, Alcynna Lloyd, at [email protected] to share your story.
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