The Commonwealth of Massachusetts has launched a new financing initiative aimed at expanding housing supply, offering homeowners access to loans for building accessory dwelling units (ADUs).
.jpg)
Announced by Maura Healey and Kim Driscoll, in partnership with MassHousing, the statewide program provides second mortgages of up to $250,000 to eligible homeowners seeking to add an additional unit to their property.
Homeowners across Massachusetts can now apply for the program, which is designed to make it easier to move from planning stages to actual construction.
The initiative builds on recent policy changes that legalized ADUs statewide under the Affordable Homes Act, removing one of the biggest barriers to development.
“Expanding housing options for Massachusetts residents is one of our administration’s top priorities, and accessory dwelling units are one of the most practical ways to create housing and drive down costs in communities across our state,” said Governor Maura Healey. “We made ADUs legal statewide through the Affordable Homes Act, and now we’re partnering with MassHousing to help more homeowners actually build them. This program will open the door for families to create new homes, support loved ones and strengthen neighborhoods across Massachusetts.”
“Homeowners want a clear, affordable path to build an ADU, and financing is often the biggest hurdle,” said Lieutenant Governor Kim Driscoll. “By offering fixed-rate second mortgages of up to $250,000 through trusted community lenders, we're helping more families move from plans and permits to construction. ADUs can support multigenerational living, help seniors stay close to family and create new rental opportunities in communities statewide.”
The loans will support both detached and attached ADUs, covering construction costs up to $250,000 for standalone units and $150,000 for those integrated into existing homes.
State housing leaders emphasized that the program is structured to reach moderate-income homeowners who may not otherwise have access to affordable financing.
“Our goal is to make ADUs a real option for more homeowners, not just those with significant equity,” said Jennifer Maddox, Interim Secretary of Housing and Livable Communities. “By expanding access to affordable financing, we’re helping more residents take advantage of the new law to expand their housing options for themselves, family members or renters.”
“MassHousing is proud to support the Healey-Driscoll Administration’s efforts to bring accessible, affordable ADU financing within reach of homeowners of all means, in all regions of our state,” said MassHousing CEO Chrystal Kornegay. “Accessory dwelling units give homeowners the flexibility to meet their housing needs by creating an additional housing unit on their property for intergenerational family housing, or to create rental income. ADU construction empowers homeowners to help expand the state’s housing stock, and MassHousing’s new ADU loan program will help ensure that ADUs are within reach of moderate-income homeowners.”
“MassHousing’s new ADU loan program serves the needs of moderate-income Massachusetts families, by providing 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,” said Mounzer Aylouche, Vice President of Homeownership Programs at MassHousing. “We thank our statewide network of community lenders for their work to quickly stand up this new program, and we are excited to begin helping local families construct new housing units.”
Accessory dwelling units—often called backyard homes, granny flats or in-law suites—are increasingly seen as a flexible and cost-effective solution to housing shortages. By allowing homeowners to build smaller secondary units on existing lots, ADUs can increase density without requiring large-scale developments.
Massachusetts’ approach combines policy reform, financial incentives and technical support. In addition to the loan program, the state has introduced a $10 million technical assistance initiative to help homeowners navigate design, zoning and permitting challenges.
.jpg)
The loan structure itself is designed to reduce financial burden. It includes a fixed interest rate of 5.25%, paired with deferred-payment components and zero-interest portions, effectively lowering borrowing costs while increasing access to capital.
Eligibility is capped at 135% of area median income, ensuring the program targets middle-income households. Borrowers must also have permits and designs in place, positioning the program as a construction-ready financing tool rather than early-stage funding.
The initiative is part of a broader housing strategy that includes speeding up permitting, converting underutilized commercial properties into residential units and expanding support for first-time homebuyers.
As housing affordability continues to challenge many U.S. states, Massachusetts’ ADU financing program could serve as a model for how targeted policy and funding mechanisms can unlock small-scale, community-driven housing growth.
Originally reported by Massachusetts Government.
