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ADU rules by state — what changed and what matters
California's 2020 ADU legislation fundamentally changed what local governments can and cannot restrict. Several other states have followed with similar pro-ADU legislation. If you are in California, Oregon, Washington, or Massachusetts, your rights as a homeowner to build an ADU are significantly stronger than they were five years ago.
What local governments can still control
Even with streamlined state rules, local governments typically still control setbacks from property lines, maximum ADU size relative to primary dwelling, owner-occupancy requirements, and utility connection requirements. Check your local jurisdiction's ADU ordinance before assuming state law applies in full.
Financing an ADU
ADUs can often be financed through a cash-out refinance, home equity line of credit (HELOC), construction loan, or renovation mortgage (203k or Fannie Mae HomeStyle). Projected rental income from the ADU can sometimes be counted in mortgage qualification calculations, which can make the numbers work for homeowners who might not otherwise qualify.
Return on investment
In high-rent markets (San Francisco, Los Angeles, Seattle, New York), ADUs can generate $2,000–$4,000/month in rental income and add $150,000–$400,000 to property value. In lower-rent markets, the math is more modest. Calculate both the rental income and the property value impact for your specific market before committing.