Looking to increase the amount of housing in the state, MassHousing is rolling out a new financing program for homeowners to build secondary units on their properties.
The financing program is for accessory dwelling units, better known as ADU. The statewide legalization of ADUs hasn’t exactly led to an explosion in production of these homes located on the same lots as larger primary dwellings, but MassHousing wants to change that.
MassHousing is working to launch a new ADU-focused lending program this spring, according to a press release issued by the quasi-public agency on Wednesday. While high-income homeowners have generally funded their own ADU projects, those with fewer means have been running into financial challenges when attempting to add more housing to their properties.
The program will provide fixed-rate loans financing construction costs up to $250,000 for detached ADUs, and up to $150,000 for attached ADUs.
“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,” Ed Augustus, Housing and Livable Communities secretary and former Worcester city manager, said in the press release. “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.”
This new program comes as Gov. Maura Healey announced a series of initiatives aimed at boosting ADU production, according to a press release issued by her office in December.
Those efforts included a design contest, offering prizes for those generating replicable designs homeowners can use at no cost to help build ADUs, as well as $10 million in support for homeowners through the Massachusetts Housing Partnership.
A state law signed by Healey in August 2024 legalized ADUs by right in single-family zoning districts across most of Massachusetts, but continued resistance from some local officials has hampered their construction, according to the Pioneer Institute, the self-described free market think tank based in Boston and once led by former Gov. Charlie Baker.
The state has estimated it needs 222,000 new housing units to meet demand over the next decade, but only 550 ADUs were permitted in the first half of 2025, according to the study. This is less than a quarter of the number permitted in California on a per-capita basis.
“Without actionable policy changes, young people will continue to leave Massachusetts in droves and many older adults will be trapped in large homes that no longer suit their needs,” Andrew Mikula, author of a pro-ADU study, said in a November blog post from the Pioneer Institute. “The state needs to keep iterating on its recent reforms to expand opportunities for homeowners to build ADUs.”
The study suggested an overhaul of parking requirements and site plan review criteria for ADUs, as well as allowing them to be sold separately from the primary dwelling unit, among other tweaks.
Eric Casey is the managing editor at Worcester Business Journal, who primarily covers the real estate and banking & finance industries.
