An ADU might cost between $350,000 and $450,000 to build, but that’s not the whole story. Operating an ADU as a rental property comes with recurring costs, too. iStock illustration
Massachusetts homeowners just got a new, low-cost tool to help them figure out how to build an ADU. But even with a plan in place, they still face big cost hurdles.
The Massachusetts Housing Partnership has recently launched a feasibility studies directory in collaboration with the Executive Office of Housing and Livable Communities. There are currently 21 providers covering the entire state. Several entries include that the provider speaks multiple languages, and five of the providers offer studies with zero out-of-pocket costs to the property owner. Others charge between $350 and $500.
“We felt that Step One to unlocking ADU construction is to give homeowners a clear roadmap and the tools they need to know where to start,” MHP ADU Program director Meredith Boericke said. “Getting a sense for what’s feasible on the lot. What some of the barriers are that they would need to think about and then understanding what it would take to move forward so that they can get to the construction phase?”
As of May 2026, over 1,200 building permits for ADUs were issued in 2025 according to the state Executive Office of Housing and Livable Communities. Healey administration officials hope between 8,000 and 10,000 ADUs will be built over the next 10 years.
Thousands in Pre-Construction Costs
Even before concrete is poured and nails start hitting studs, a homeowner is already out several thousand dollars.
Site survey costs, alone, can be between $7,000 to $10,000 while building permit fees can range from $750 to $5,000 dollars depending on the municipality, said Buz Artiano, owner of South Shore ADU builder BuildX.
ADU designs in Massachusetts also need to be subjected to home energy rating modeling, he said, which costs between $1,200 and $1,500.
Builders also have to factor in the cost of plans for the ADU, which can cost between $1,500 to $5,000, according to Artiano. The state has tried to address this specific cost issue by hosting an ADU design contest. These designs are available to be downloaded for free and the contest garnered over 100 qualifying designs.
Issues surrounding zoning and wetlands cause the most setbacks, Artiano said. The average project takes between five and eight months.
“Those feasibility studies,” Artiano said. “I’m all for it because at least that’s the first question, right? ‘Will it fit?’ So, if they can get if they can get that done for free, I’m all for it.”
Once an ADU is built, there are also water connection fees to be paid. Those can run between $3,000 and $7,000 and also includes additional charges between $3,000 and $7,000 for labor associated with the water connection with sewer systems costing a similar amount.
Building and Borrowing Costs
Once it’s time to build, the homeowner’s costs only continue to increase.
BuildX’s ADUs cost between $350,000 and $450,000 for both attached and detached units, Artiano said. These are all-in prices that include some of the soft costs that can accumulate before construction.
For a 758-square-foot unit, the price per square foot on average is $527.70 while a 900-square-foot unit averages $500 per square foot, Artiano said.
But builders across industries have had to deal with increasing costs. According to the Bureau of Labor Statistics Producer price index, there has been a 5.1 percent increase in lumber prices.
Most homeowners are likely to pay for an ADU with private debt. And a number of local financial institutions have already stepped up to offer it – typically on the condition that the borrower already owns the property.
Chelsea-based Metro Credit Union offers ADU construction loans with a similar rate structure to its home equity line of credit product. The rates range between 5.75 percent and 7.50 percent, depending on the loan term.
Lowell-based BankFive has a similar product that is likewise akin to a HELOC. The bank also provides FHA loans and traditional construction loans for ADU construction.
Hyannis-based Cape and Coast Bank has an ADU loan program as well, which also finances septic-system upgrades. Homeowners can choose between a HELOC and a home equity loan, as well as refinancing an existing mortgage.
Other community banks in Massachusetts offer broadly similar products.
MHP’s fellow state housing finance agency, MassHousing, rolled out its own program for lower-and middle-income borrowers earlier this year. The program combines a 5.25 percent loan amortizing over a period of 20 years, matched with additional funding offered at 0 percent interest and deferred repayment terms.
The program can loan out up to $250,000 per detached ADU or $150,000 for an “attached” unit carved out of an existing building.
Sam Lattof
Operating Costs Add Up, Too
Then, once the ADU is built there are additional costs if a homeowner wants to rent out their new unit.
“The big three are mortgage, real estate taxes and insurance,” said Doug Quattrochi, executive director of trade group MassLandlords. “If you have to borrow, which is pretty common, probably more than half – maybe three quarters – of all the rent that you’ll be taking is spoken for with debt, and then you’ve got a huge amount of real estate tax owed.”
Insurance costs are also increasing, he said, by between 10 to 20 percent due to recent weather events.
“Massachusetts is not safe because we had downtown Leominster get flooded out, got a lot of wind damage, and insurers are canceling landlords who have a roof that’s 20 years old or older – even if we got a guarantee for 30-year-old asphalt shingles,” Quattrochi said.
Landlords need to anticipate spending money on regular repairs, he added, more than if .
“Renters are pretty tough on properties. It’s just human nature. We’re tough on rental cars. We’re tough on rental housing,” Quattrochi said.
For ADU builders looking to recoup costs by renting out the unit, they will be entering a market that is seeing declining rents. The average rent in the Boston metro in June was $2,930 in June 2026, according to Realtor.com. That’s down 4.1 percent year-over-year.
MHP’s feasibility studies can’t solve the cost conundrum for homeowners. But they can help surface more information about where more help is needed, Boericke said.
“We’re definitely very mindful of cost and trying to figure out what’s it going to take to help homeowners,” she said. “That’s what we hope to learn as we start to collect the data and information coming from all the studies. We’ll definitely get a better idea of where costs are coming in. It’s always top of mind, no matter what you’re doing, especially when it comes to building and buying.”
