Press Release: 1/15/2026

MassHousing Announces New Accessory Dwelling Unit Construction Loan Program

 

Second mortgages of up to $250,000 will help low- and moderate-income homeowners add an additional unit to their home

JANUARY 14, 2026

BOSTON – January 14, 2026 – MassHousing announced today that the Agency is preparing to launch a new accessory dwelling unit lending program. Working with its statewide network of lenders, MassHousing is now positioned to open the ADU loan program to consumers later this spring.

"This program expands on the Healey-Driscoll Administration's commitment to adding much-needed housing across the state by tackling one of the biggest barriers to building ADUs: access to affordable financing," said Housing and Livable Communities Secretary Ed Augustus. "By pairing our statewide ADU framework with low-cost construction loans for households often locked out of traditional equity products, MassHousing is turning innovative policy into real, livable homes."

"Financial barriers are a key constraint to the construction of new accessory dwelling units across the country," said MassHousing CEO Chrystal Kornegay. "In collaboration with our partners in state government and community-based lenders, MassHousing is working to bring accessible, affordable ADU financing within reach of homeowners of all means, in all regions of our state. We are excited to reach this milestone, and we look forward to opening the new ADU loan program to Massachusetts homeowners in the coming months."

"MassHousing's new accessory dwelling unit loan program will bring flexible and affordable construction financing to working families," said Mounzer Aylouche, Vice President of Homeownership Programs at MassHousing. "Working with our statewide network of lenders, this new loan product will provide Massachusetts homeowners with a fixed-rate second mortgage product with transparent costs -- at a lower interest rate and higher combined loan to value limits than are currently available through a home equity line of credit."

Accessory dwelling units (ADUs) are small residential living spaces that are located on the same lot as another home. The Healey-Driscoll Administration's Affordable Homes Act removed a significant obstacle to ADU construction by legalizing the construction of ADUs in single-family zoning districts statewide. The Administration's action on ADUs created a simple and effective tool for increasing housing production statewide and lowering housing costs.

Last month, Gov. Maura Healey launched a new campaign to accelerate ADU construction across Massachusetts. The Governor announced a new ADU design challenge that will help bring replicable, no-cost ADU designs to consumers and communities; a $10 million technical assistance program, administered by the Massachusetts Housing Partnership, to accelerate predevelopment activities related to ADU construction; and new ADU financing through MassHousing.

Today's announcement advances the Governor's ADU campaign by launching the MassHousing ADU loan with partner lending institutions, creating the capacity for homeowners to begin applying for ADU construction financing later this spring.

Nationwide, it is common for wealthier homeowners to utilize home equity financing to fund the construction of an ADU. Low- and moderate-income homeowners may not be well positioned to tap their home equity to finance ADU construction. MassHousing's new ADU loan will serve these homeowners by offering flexible, affordable construction mortgage financing to add an ADU to their home.

The MassHousing ADU loans will support new ADU construction, either within the envelope of an existing home or elsewhere on a homeowner's lot. The new ADU construction loan will be a fixed-rate second mortgage product that will finance construction costs up to $250,000 for detached accessory dwelling units, and up to $150,000 for attached accessory dwelling units.

MassHousing has built its ADU loan program to allow qualified Massachusetts homeowners to maximize their borrowing power, without burdening them with excessive debt. The product will be structured as an interest-bearing loan amortizing over a period of 20 years, matched with additional funding offered at zero percent interest and deferred repayment terms. This creative loan structure will lower effective interest rates for borrowers, and allow consumers to access greater overall loan amounts.

Eligible applicants will meet MassHousing's statutory income limits of up to 135 percent of the area median income (ranging from $205,335 for a household living in eastern Massachusetts, to $165,345 in Worcester County, to $129,870 in Hampden County), and meet other loan underwriting criteria.

MassHousing's new ADU loan product is intended to act strictly as construction-to-permanent financing. It will serve homeowners who have designs and permits for their ADU in hand and are ready to move forward with construction.

MassHousing anticipates that potential borrowers may access MHP technical assistance funding to accomplish predevelopment activities, including design and permitting, then apply for MassHousing financing when they are ready to finance construction of their ADU.

About MassHousing

MassHousing (The Massachusetts Housing Finance Agency) is an independent, financially self-sustaining agency created in 1966 to confront the Commonwealth's housing challenges. The Agency provides financing to low- and moderate-income homebuyers and homeowners, and to developers who build or preserve rental housing. As a mission-driven agency, MassHousing uses housing finance to strengthen communities, to help people build economic prosperity, and to expand homeownership. Since its inception, MassHousing has provided more than $30 billion to support homeownership and rental housing opportunities across Massachusetts. For more information, visit www.masshousing.com.