MassHousing announced that the Agency is preparing to launch a new accessory dwelling unit lending program. Working with its statewide network of lenders, MassHousing is now positioned to open the ADU loan program to consumers later this spring.
Last month, Gov. Maura Healey launched a new campaign to accelerate ADU construction across Massachusetts. The Governor announced a new ADU design challenge that will help bring replicable, no-cost ADU designs to consumers and communities; a $10 million technical assistance program, administered by the Massachusetts Housing Partnership, to accelerate predevelopment activities related to ADU construction; and new ADU financing through MassHousing.
The announcement advances the Governor’s ADU campaign by launching the MassHousing ADU loan with partner lending institutions, creating the capacity for homeowners to begin applying for ADU construction financing later this spring.
The new ADU construction loan will be a fixed-rate second mortgage product that will finance construction costs up to $250,000 for detached accessory dwelling units, and up to $150,000 for attached accessory dwelling units.
MassHousing has built its ADU loan program to allow qualified Massachusetts homeowners to maximize their borrowing power, without burdening them with excessive debt. The product will be structured as an interest-bearing loan amortizing over a period of 20 years, matched with additional funding offered at zero percent interest and deferred repayment terms. This creative loan structure will lower effective interest rates for borrowers, and allow consumers to access greater overall loan amounts.
Eligible applicants will meet MassHousing’s statutory income limits of up to 135 percent of the area median income (ranging from $205,335 for a household living in eastern Massachusetts, to $165,345 in Worcester County, to $129,870 in Hampden County), and meet other loan underwriting criteria.
MassHousing’s new ADU loan product is intended to act strictly as construction-to-permanent financing. It will serve homeowners who have designs and permits for their ADU in hand and are ready to move forward with construction.
MassHousing anticipates that potential borrowers may access MHP technical assistance funding to accomplish predevelopment activities, including design and permitting, then apply for MassHousing financing when they are ready to finance construction of their ADU.
