Budgeting

Overview

Estimate your project budget
Understand the types of financing available
Know how an ADU might impact your property tax assessment and home value

Your budget is one of the most important parts of your ADU project. You will need to balance design with what you can afford, but also consider potential rental income. Assess your finances early on, after you’ve learned what you can build and thought about what you want and before you hire and start working with a design team.

Project Timeline

Budgeting is part of the Planning phase, which typically takes 1-3 months. Most ADU projects take 12-18 months to complete, but some extend to 24 months or more.

FAQs

How much does it cost to get permits for an ADU?

ADUs can be charged a variety of fees from your local government, the State, and other agencies. Some fees are based on details of the project while others are fixed. The total amount depends highly on your property and plans.

Typically, ADUs in Maine can expect to incur the following fees:

Planning review: $100–$300
Building permit: $10–$15 per $1,000 of project cost
Impact fees: Vary by town; often waived for ADUs under 750 sq ft
Utility hook-up or connection fees

How much does it cost to design an ADU?

Design costs cover the work of your architect or designer and may or may not include engineering, surveying, and other professional services necessary to prepare for permitting. Together, these services may total around 10% of your total project budget – the exact amount depends on the details of your property and project. See the budgeting page for more details.

What about the money I could make renting the ADU?

Rental income is a major benefit of having an ADU on your property – for many people, it provides flexibility in their budget or an opportunity to grow their savings. Sometimes funding products will take into account the potential rental income and/or value increase of your property to help you pay for your project.

Make sure you understand the short-term rental rules for your community.

Can I eventually sell my ADU separately from the main building?

No, not by default—but there are exceptions with specific legal steps.

LD 2003 Does Not Require Separate Sale Rights

Maine’s state law (LD 2003) does not mandate or guarantee the ability to sell an ADU separately from the primary home. In fact, in most cases, you cannot sell it as a standalone unit because:

The ADU and primary home share the same lot.
There’s typically only one legal property title (deed) for the parcel.
ADUs are generally considered accessory structures, not separate dwellings for sale.

When Can an ADU Be Sold Separately?

To sell an ADU separately from the main home, you would generally need to:

Divide the property through:
- A subdivision or condominium conversion, and
- Get approval from the local planning board or code office.
Create separate utilities, legal access, and possibly a new lot (or condo unit).
Record separate deeds or ownership structures.

This is a complex process and not commonly pursued in Maine unless part of a condo or multifamily development.

In Practice (Maine Municipalities): Most towns do not allow ADUs to be sold separately without a full subdivision or condominium process. Some municipalities may explicitly prohibit separate conveyance in their ADU ordinances.

How will building an ADU affect my taxes and property values?

Your taxes will increase only based on the value of the new ADU. Contact your local Assessor’s Office for a site-specific estimate.

What if I don’t have a lot of money available right now to build an ADU?

If you have equity in your home, a cash-out refinance or home equity loan/line of credit (HELOC) might work for you. Financing is typically unavailable for homeowners with lower income and insufficient home equity.

How am I going to pay for an ADU?

Many homeowners use a mix of options to finance their ADU, including savings, funds from family, and/or loans. It is strongly recommended that your financing is in place before construction starts. Be sure to factor in potential rental income since that will help you repay loans.

With more Mainers interested in building ADUs and towns loosening zoning rules, new loan options are now available that are tailored to ADU projects.

Unlike refinancing an existing mortgage—which can lock homeowners into higher interest rates—ADU loans are typically offered as a second mortgage with repayment terms of up to 30 years. They are also based on the “as-complete” value of the home after the ADU is built, giving borrowers access to more funds for design, permits, and construction.

These loans usually feature fixed interest rates and allow interest-only payments during construction, making monthly costs more predictable and easier to manage.

Check our professionals directory for a selection of banks and financial institutions that might work for you.

How much does it cost to build an ADU?

General ADU cost estimates in Maine:

Interior Conversion ADU: $30,000 – $100,000
Garage Conversion ADU: $60,000 – $150,000
Attached New ADU: $100,000 – $300,000
Detached New ADU: $200,000 – $500,000

This cost varies widely based on your design and the requirements of your site and local municipality. See Budgeting for more detailed information on costs and financing for your ADU.

Budgeting, Step-by-Step

Keep in mind Initial cost estimates are likely to change as you move through the process, and you won’t know what it will truly cost until you talk to a professional. Current workforce and supply chain disruptions are causing prices to move up and down more quickly than usual. If you have a tax or financial advisor, it is always good to check in with them early on too.

Step 1

Estimate Your Project Cost

It’s never too early to estimate project cost, and can help you make some initial decisions about ADU type, size, and features. It is helpful to avoid having a fixed budget total in your head as you explore your options. The real number can vary widely and depends on many factors.

Here are a few cost estimates:

Interior Conversion ADU: $30,000 – $100,000
Garage Conversion ADU: $60,000 – $150,000
Attached New ADU: $100,000 – $300,000
Detached New ADU: $200,000 – $500,000

Development Costs ("Soft Costs")

“Soft costs” include the planning and preparation for your project. Also called pre-construction costs, they can include (but are not limited to) fees for:

Design and engineering
Permitting
Surveys and site prep

Soft costs typically aren’t covered by a construction loan, so need to be either self-funded or paid for with financing like a refinance or second mortgage.

Design fees cover the work of your design team and vary with every project. Clarify what costs are and are not covered by your contract with your design team (including surveying, engineering, and others).

Permitting fees are charged by your local government, the State, and other agencies. Some fees are based on the details of the project while others are fixed. Surprisingly, local governments do not control many of the most expensive fees, like school and water fees, which are assessed by other agencies and dependent on the size or location of your ADU.

The fees listed below are often required, but the exact list of fees and when they are due will vary depending on where you live. Contact local staff for more information. Fees may include:

Planning review/permit fees
Plan check fees
Building permit fees (generally due when your permit is issued)
Other department fees (staff will let you know what applies to your project)
School District fees (ADUs over 500 SF)
Development impact fees (ADUs over 750 SF)
Utility and sanitation (contact utility agencies as you develop the design for your ADU for more information)

See the Permitting page for an overview of permits.

Construction Costs ("Hard Costs")

ADU construction costs (“hard costs”) vary significantly depending on materials, site conditions, and other factors. Hard costs are typically 85% of your total project budget, and can range from $30,000 for a simple interior conversion to $400,000+ for a large detached ADU with high-end finishes on a hillside lot.

Hard costs include:

Materials and labor
Utility connections
Site work

Despite what many think, smaller ADUs may cost almost the same as larger ones. Many costs like foundation, kitchen and bathroom work only increase slightly for larger ADUs. Kitchen costs will range from $25,000–$50,000 with each bathroom ranging from $15,000–$25,000.

New construction, both detached and attached, tend to be the most expensive. Garage conversions are not much cheaper than new construction if at all. Conversions of interior space (basement or otherwise) are often the cheapest.

Other factors:

Quality of interior finish work and amenities
Architectural form and details
Extent of utility, structural, mechanical, electrical, and plumbing upgrades required
Required site upgrades (sidewalks, sewer and water)
Whether sprinklers are required
Whether doors and windows meet emergency exit standards
Lot complexity (slope, trees, fault lines, etc.)

Step 2

Assess Financing Options

Many homeowners use a mix of options to finance their ADU, like their own savings and assets, funds from family, and/or loans. It is strongly recommended that you do not begin construction without your financing plan in place. Be sure to factor in potential rental income since it will be a source for repaying any loans.

Financing options include:

Home equity loans or lines of credit (HELOCs)
Cash-out refinance
Personal loans
Savings/family contributions

With more Mainers interested in building ADUs and towns loosening zoning rules, new loan options are now available that are tailored to ADU projects.

These loans usually feature fixed interest rates and allow interest-only payments during construction, making monthly costs more predictable and easier to manage.

Finance professionals from our directory

Here are some financing options from our Professionals Directory:

Construction loans for ADUs from Kennebunk Savings Bank

Kennebunk Savings Bank

Kennebunk Savings Bank offers loans for ADUs. The maximum loan is $250,000 with a term length of 10 to 30 years. Maximum loan to the value of the principal and home value is 89.90%. It allows 75% of ADU income. Closing fee is $1,500. Serving York & Cumberland counties in Maine, Rockingham and Strafford counties in New Hampshire. Original property can be a primary residence, second home, or 2-3 family primary residences.

Loan officer, Bangor Savings Bank

Construction loans for ADUs from Bangor Savings Bank

Bangor Savings Bank offers construction loans for ADUS in all of Maine, New Hampshire, & Massachusetts. The loan maximum is $500,000. Term length 10 to 30 years. Maximum loan to the value of the principal and home value is 85% Allows 75% of ADU income. Closing fee $2,750 to $3,750. Homeowner can pay off existing equity line, can build an ADU on 1-3 unit primary residence, detached condos if allowed by HOA

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