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ADU Loan Financing

The Backyard Homes Project
In order to support the development of new Accessory Dwelling Units (ADUs) in the City of Madison
the City’s Community Development Division has limited funding available in 2022 to provide
financial support to homeowners facing barriers in the traditional lending market.

The City is offering a 15 year installment loan at 2% interest to eligible homeowners. Learn more
about this program by reading the Backyard Homes Project term sheet.

What is an ADU?
An ADU is a small independent residential unit located on the same property as a stand-alone home.
ADUs can be attached to an existing home or built above an existing garage. They can be carved out
of an existing building, splitting one dwelling into two by converting underutilized spaces like
garages into new independent units. Attics and basements can also be converted into upper or lower
apartments. More common today, a detached ADU is an independent dwelling within a stand-alone
structure often located in a backyard. ADUs are not a new concept and were a common feature in
single-family housing in the early twentieth century. Historic  lly, ADUs have also been referred
to as an in-law or mother-in-law unit, granny flat or carriage house.

ADU Frequently Asked Questions

ADU Loan Application 2022 Fillable


Email us at: or call 608-266-6520









Last Updated: 05/17/2022