PITTSFIELD — What do you need to know before you build an accessory dwelling unit?
On Thursday, Greylock Federal Credit Union held a class at its facility at 75 Kellogg St. explaining what homeowners need to know before building an ADU.
“There’s a lot of reasons to [build one],” said Myla Franklin, a community lending officer at Greylock. “As things get more expensive, more families are needing to find ways in order to keep their homes.”
The class, “ADU 101: Building Possibilities,” covered the long process of building an ADU and how to utilize state and local resources to finance the project.
But why build one in the first place?
One participant on Zoom spoke about downsizing, while another wanted additional income. Those different goals can affect how a homeowner approaches an ADU project.
Franklin explained that using the unit as a rental can actually increase the borrowing amount a homeowner could qualify for. The same can apply if a homeowner downsizes and rents out the primary home.
Another early step homeowners need to take is speaking to local building inspectors or contractors to see if their project is allowed, said Jeff Lowenstein, a financial wellness coach with Greylock.
ADUs no longer require special permits to be built, but the units still have to adhere to local zoning and building codes, Lowenstein said.
To help with this planning process, the state launched an “incentive program to help cover the cost of a feasibility study,” Franklin said. “It will tell you a lot of information: Where to start, who to talk to, how to get going.”
The study can help homeowners begin developing more detailed plans, including bringing on a contractor, she said.
Having a set plan for construction is crucial for getting financing too, as Franklin explained that each type of ADU has different price ranges and funding opportunities.
Interior units, built inside existing structures like a garage or basement apartment, can cost between $40,000 and $150,000. Attached units, which are built on or next to existing structures, can cost between $100,000 and $300,000. Detached units can cost between $180,000 and $300,000.
Franklin said units coming in on the low end are rare, but she highlighted several programs that can help homeowners manage those costs.
MassHousing, a quasi-public agency that helps low- to moderate-income families afford housing, has a low-interest loan program, lending out up to $250,000, Franklin said. Homeowners must make less than 135 percent of the area median income, which is $160,100 for a family of three in Pittsfield.
Greylock is an authorized lender for this program, but the credit union also has its own ADU financing tools, she said. One is an adjustable-rate mortgage with a 25-year term. There are no income requirements, but the loan would need to be the only one currently on the property.
The adjustable rate on the loan has limits on how much it can change, Lowenstein said, with the rate being capped at a 6-percentage-point change in either direction. If a rate starts at 8 percent, it could rise to 14 percent or fall to 2 percent.
Homeowners using the other loan program would have a 20-year, fixed-rate mortgage, with the rate set at 5.99 percent, Franklin said. That’s more than a percentage point lower than the current 30-year mortgage.
That loan also does not need to be the only mortgage on a property, but it is capped at $400,000.
Some municipalities have their own ADU programs, which should also be taken into consideration, Lowenstein said. For example, Great Barrington recently launched a program that helps fund ADU construction if the owner agrees to rent it out at an affordable level.
Greylock also emphasized that it is there to help anyone with logistics, even if they aren’t a member of the credit union.
“It’s all about building these units, if we build them, then people will come and live here and our communities will thrive,” Franklin said. “And that’s what Greylock wants.”
NATE HARRINGTON — THE BERKSHIRE EAGLE