A beneficial housing opportunity for property owners, allowed in all New Hampshire communities by state statute.
Have you heard about the flexible, affordable, multipurpose building structure called an ADU? An accessory dwelling unit—also known as a granny flat, in-law suite, accessory apartment, laneway house, or multigenerational home—has many potential benefits. It can be a self-contained apartment for a family member or caregiver or a rental unit to generate an additional income stream. It can be attached to the primary house on a property (above a garage, on the side of the house, in an attic or basement) or detached from it (a converted garage or barn or new construction).
The ADU is truly a beneficial housing opportunity for property owners, and they are allowed in all New Hampshire communities by state statute.
According to New Hampshire state law, property owners must be permitted to build an accessory dwelling unit anywhere where single-family houses are allowed. Municipalities must allow for up to 2 bedrooms and at least 750 square feet (although many municipalities allow for more than 750 square feet).
The state allows municipalities flexibility in pretty much all other aspects of how they adopt the ADU statute. To determine what is permitted in your area, contact your municipality’s zoning administrator, community development director, planning board staff member, or building inspector. You can also search your town website under zoning ordinances.
So what might impact your ability to build an ADU? Acreage does not matter, but front, side, and back setbacks do. Other common restrictions include the type of zone your property is in (residential versus commercial or industrial) and whether the owner plans to live on the property.
The process for obtaining approval and any necessary building permits to construct an ADU also vary from one municipality to the next.
Your town could allow ADUs “by right,” which will likely mean you (or your builder) only need to present your renovation plans and septic system information to obtain a building permit. However, should you need a special exception or conditional use permit, you may have to take a few more steps to get approval.
Zoning ordinances and building statutes are rarely written in layman’s terms. So if you are feeling overwhelmed or confused by technical specifications or procedures, don’t get discouraged.
Solid Roots Construction has experience building accessory dwelling units in Manchester, Deerfield, Merrimack, Bedford, Londonderry, and many other southern New Hampshire towns. Consider us a reliable resource in building an ADU on your property. From determining the specific regulations governing your property to filing for permits and keeping accurate records, the Solid Roots team can help eliminate uncertainty and move your project forward.
In-law suite. Granny flat. Backyard cottage. Guest house. Though we know it by various names, the accessory dwelling unit (ADU) is in fact a standard term in real estate and zoning. But out in your town, and increasingly in neighborhoods across the country, you will find them taking many different shapes.
According to NH law, an ADU can be built inside an existing home: in the attic, over the garage, in the basement, in a converted office or bedroom. Or it can be added to the side of an existing home and attached in a variety of ways. It can even be a free-standing, self-contained home if it is on the same lot as the main house.
Looking for information about how to pay for an accessory dwelling unit? As an existing homeowner, there are several options available to you, depending on your financial needs. Consider the options below and use the links to obtain more detailed information.
If you are fortunate enough to have substantial savings, you may be able to pay for your ADU construction outright. Or you could explore borrowing against a retirement account or pursuing a personal line of credit. Remember to consider your potential return on investment if you plan to use the unit to generate rental income. You can calculate an estimate for how long it will take you to recover the cost of building and create positive cash flow.
Many homeowners choose this route for financing their ADU. Read more about types of loans below.
Your property is a valuable asset—one you can use to secure a loan for building an ADU. Contact your local bank to explore the various ways you can leverage your property to fund an ADU project.
If you have sufficient equity in your property, you may be eligible to refinance your initial mortgage for a higher amount and put the money toward building an ADU. This allows you to spread the cost of the ADU over a longer period than some other loans, with a repayment period that can typically go up to 30 years.
There are a few scenarios in which a construction loan could help finance an ADU. If you are building a new home that will include an ADU, you might start with a construction loan to pay the builder; the bank will then convert the loan to a mortgage when the project is complete. If you are adding an ADU to your existing property, you can also secure a construction loan. This process may involve an appraisal and significant involvement on the part of the lender in your choice of contractor and the construction process. The loan will eventually be converted to mortgage when the ADU is finished.
A HELOC is a type of second mortgage a property owner with sufficient equity in their home can obtain, and it can help finance home improvements like building an ADU. HELOCs are typically payable in 10 to 15 years at a fluctuating interest rate and work like a credit card, allowing you to draw on a line of credit and then pay it down as often as you need to during the duration of the loan. The maximum amount is determined by the current value of your home, but you only need to borrow as much as any given project requires.
Another form of second mortgage, the home equity loan allows you to borrow a lump sum at a fixed interest rate and a fixed repayment period (often 15 years). Ask your local financial institution to help you determine which type of second mortgage best suits your needs for building an ADU.
Many homeowners use a bank loan to finance construction of their ADU. The following factors impact whether you will qualify for a loan.
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