Learn · Financing

How to pay for an ADU
in Colorado.

Most ADU projects are funded through home equity. Here are the main options, how they work, and what lenders typically look for.

Your main options

Home Equity Line of Credit (HELOC)

Best for: homeowners with 30%+ equity who want flexibility

You borrow against your existing home equity. Funds are available as a credit line. You draw against it as construction progresses and pay interest only on what you've drawn. After construction, you can refinance into a fixed-rate product if desired.

Construction-to-Permanent Loan

Best for: larger projects or homeowners who want a fixed rate from the start

The lender approves the project based on plans and the builder's credentials. During construction, they disburse funds in draws (typically 4–5 stages). After construction completes, the loan automatically converts to a permanent mortgage. One closing, one set of fees.

CHFA (Colorado Housing and Finance Authority)

Best for: ADUs intended for affordable or workforce housing

CHFA offers programs that support ADU construction as part of Colorado's housing strategy. Eligibility depends on the intended use, location, and occupant income levels. Check chfainfo.com for current programs or ask us — we track what's available.

Cash / Savings

Best for: homeowners who want zero debt and maximum simplicity

Straightforward: you fund the project directly. With Addwell's fixed pricing, you know the total before you commit. Many homeowners use a combination — cash for a portion, HELOC for the rest.

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Permitted plans

Addwell provides permit-ready drawings as part of the project.

Licensed, insured contractor

Addwell carries all required licenses and insurance.

Fixed-price contract

Lenders prefer this over cost-plus. We only do fixed-price.

After-construction appraisal estimate

Some lenders require this. We can help coordinate.

Proof of equity or down payment

Typically 15–20% of project cost, depending on loan type.

Construction timeline

Addwell provides a detailed schedule at contract signing.

Figure out the lot first. Financing follows.

Most financing conversations go faster once you know your plan size and project scope. Start with the property.

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Keep exploring

ADU rules by city

Cited, city-by-city ADU rules across the Front Range.

Rental income potential

Real numbers on what ADUs earn.

ADUs for family

Aging parents, multigenerational living, childcare.

Process & timeline

What to expect from contract to move-in.

Floor plans & pricing

Three sizes, three tiers, two styles.

About Addwell

Who we are and how we build.