Accessory Dwelling Units: What You Need to Know

basement in-law apartment unit

Rhode Island recently passed legislation to expand the opportunity for homebuyers or current homeowners to build an Accessory Dwelling Unit. ADUs can be a big help for a family, letting older members – like parents and grandparents – live beside younger generations while still maintaining independence. ADUs also let younger adults, like recent college grads, be near family while having their own space. Or the unit can become a rental option for the homeowner – though the law prohibits short-term rentals.

Whatever you decide to use it for, ADUs can increase your property value and help make the most out of your home.

 

What are ADUs?

ADUs are smaller, independent residential units located on the same property as a primary single- or multi-family home. They come in various forms; the types that can be financed through RIHousing’s loan are:

  • Attached ADUs: Units built as an addition to the main house, often with a separate entrance.
  • Interior ADUs: Units created within the main house, such as a finished basement.

Rhode Island now allows homebuyers and current homeowners to build an ADU on their owner-occupied property- if they meet certain criteria. Each town may have its own specific regulations, so it’s best to consult a qualified contractor who is familiar with the local requirements.

Learn more about ADUs in Rhode Island at AARP’s website >

RIHousing’s FHA 203(k) Loan

In addition to individuals or families purchasing a new home, RIHousing is now offering the FHA 203(k) as a refinance option for current homeowners who wish to build an ADU. Homebuyers or homeowners utilizing a FHA 203(k) Loan will receive a loan for both the purchase or refinance of the home and rehabilitation project(s) and/or the addition of the ADU.

Learn more about the RIHousing FHA 203(k) Loan >

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FHA 203(k) Loan Frequently Asked Questions

What type of ADU can I build with the FHA 203(k) loan?

RIHousing’s FHA 203(k) Loan finances attached or interior ADUs. The loan does NOT finance detached ADUs such as small cottages or tiny homes.

You must also talk to your contractor as each town has different regulations. Make sure your contractor is knowledgeable in the regulations for ADUs in the town where the work is happening.

I am already a homeowner. Is this only available to homebuyers?

We have refinancing options available. Talk to our Loan Center or a Participating Lender today to learn more about refinancing your home with 203(k).

See all refinance options offered by RIHousing > 

What is an FHA-approved RI 203(k) consultant?

A 203(k) consultant is a professional that works closely with the homebuyer/owner, the contractor, and their lender to identify opportunities for enhancements and guide the project.

Find a 203(k) consultant through the U.S. Department of Housing and Urban Development website or talk to your RIHousing mortgage expert.

Can I do the work myself?

An RI-licensed and insured contractor must do the work. Find out of if your contractor is licensed here.

How do I pay the contractor?

Payments should not be made to the contractor directly. RIHousing will disburse funds in the escrow account as work is inspected and completed.

Talk to a Participating Lender or our Loan Center to learn more about the loan process.