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3736 <br />In this step you will… <br />• Learn about resources <br />to help you make an <br />informed decision. <br />• Learn about potential <br />financing options. <br />Obtaining financing is often the greatest challenge homeowners face in trying to build an <br />ADU. That’s because the upfront cost can be large and there are not many financial options <br />specifically tailored to this type of development yet. Typically, homeowners use their own <br />savings, a loan or some combination of those sources to finance their ADU. <br />Here is an overview of some basic considerations and available resources to help you <br />manage or lower your costs. <br />Making an informed decision <br />Before making big financial decisions, it’s a good idea to seek advice from an independent <br />homeownership expert. One option in Minnesota is to contact a member of the non-profit <br />Homeownership Advisors Network. Advisory services are available to households of all <br />income levels. <br />Remember that you don’t have to get a loan from the first lender you meet. Be prepared <br />to seek quotes from several different lenders to see which can offer you the best rate <br />and/or terms. <br />Building an ADU may raise your property taxes because it will add value to your home, and <br />rental income may affect your income taxes. The specific impacts will be unique to your <br />home and circumstances. Be sure to consult with a qualified professional tax advisor. <br />FINANCESSTEP FOUR <br />Financing Sources <br />& Resources <br />SPECIALIZED PROGRAMS <br />The Minnesota Homeownership Center offers a <br />Rehab and Repair Program Matrix that outlines <br />renovation loan programs available by region in <br />the state, some of which may be targeted to <br />specific household income levels: <br />www.hocmn.org/resources-for-homeowners/ <br />Minnesota Housing, a state agency, offers <br />home-improvement loans that could be used <br />for ADU projects, in partnership with lenders <br />throughout the state: <br />www.mnhousing.gov <br />TIP If you are applying for a loan, secure your <br />financing about one month before you’re ready <br />to apply for permits. <br />RENTING <br />Renting out your ADU may earn back some <br />of your construction costs over time. Be <br />aware that lender guidelines may not allow <br />consideration of your future rental income <br />when determining your eligibility for a loan. <br />SWEAT EQUITY <br />Find opportunities to do some of the work <br />yourself, depending on your skills. Some <br />ideas include installing cabinets, ordering <br />appliances, painting and landscaping. <br />Financing <br />Considerations