Affordable Housing: How to apply for an Accessory Dwelling Unit Loan

By Patrick Neenan
Where affordable housing is scarce, Accessory Dwelling Units also known as ADUs may be the answer. Here’s what you need to know about today’s version of the in-law suite.
An Accessory Dwelling Unit is simply defined as a smaller, independent residential dwelling unit located on the same lot as a stand-alone single-family home. Regardless of its physical form, it’s legally part of the same property as the main home. It can’t be bought or sold separately. The owner of the ADU is the owner of the main home.
To help local homeowners, First Citizens’ Federal Credit Union recently announced the offering of a new loan program to add in-law suites/small rental units to their property as Accessory Dwelling Units (ADUs) for a family member, for a caregiver, or simply to generate rental income from unused space.  The ADU Loan Program may help address our region’s housing crisis by enabling more cash-strapped homeowners to finance the renovations needed to create an additional small apartment on their property. Housing Assistance Corporation brought the idea for the ADU Loan Program to Peter Muise, First Citizens’ President and CEO, who also serves as board chair for Housing Assistance, after having dialogue with Nauset Mortgage LLC and other brokers and concluding that the market offered no loan products specifically earmarked to help homeowners who wanted to create and finance an ADU. Towns have been passing bylaws to make it easier for people to get ADU’s permitted, but no financing support was available. For homeowners that are considering building an Accessory Dwelling Unit (or ADU), one of the biggest hurdles is often financing the construction. So how do you get started?
Step One: Learn How the Program Works
First Citizens’ ADU Loan offers many financing options for different ADU scenarios, including purchasing a new home or refinancing an existing home and building an ADU, constructing and financing a new home with an ADU, using existing home equity to build an ADU. This loan program is unique from other loans in that First Citizens’ will consider the rent income potential of the newly created apartment when reviewing a loan for approval. Some of the features of this loan include:

  • Fixed Rate
  • 80% LTV Maximum
  • Owner Occupied
  • 640 Minimum FICO
  • 45% Maximum Debt to Income Ratio
  • Flexibility to use Accessory Unit Rental Income to qualify
  • Flexibility to use Assets as apportioned income to qualify

Step Two:  Gather All of Your Info
It is common practice to begin by figuring out a budget and then design and build to that budget. The first step should be finding out how much you can qualify for and how much you can realistically afford. Check to make sure you are eligible for the ADU program. You’ll also need to get an ADU permit from the Inspectional Services Department (ISD) before you can receive an ADU loan. Prepare a description of your ADU and take pictures of your current space and as well as preliminary drawings and cost estimates from a builder if your ADU will be a construction.
Step Three: Complete the Loan Application
Once you have gathered all your information you can begin the application process by contacting one of our Mortgage Lenders or simply apply online by visiting on our Mortgage Center at  To learn more, please contact Patrick Neenan, Vice President of Residential Lending, at or by calling (774) 628-7859.
Patrick Neenan is the Vice President of Residential Lending for First Citizens Federal Credit Union and can be reached at 774-628-7859 or