Massachusetts now has two state loan programs built specifically for adding an accessory dwelling unit, and which one fits depends on who the unit is for. If you are building it so an aging parent can live on your property, one of them lends at zero interest. If you are building a larger detached unit, the other lends far more. Most families' answer is one, the other, or both stacked.
The MassHousing ADU loan: the larger option
MassHousing, the state's housing finance agency, runs the Accessory Dwelling Unit Loan Program. It offers income-eligible homeowners "loans of up to $250,000 for detached ADUs, and up to $150,000 for attached ADUs" (MassHousing). The structure is the clever part: it combines an amortizing, interest-bearing loan with additional zero-interest, deferred-repayment financing, which lowers the effective rate and lets a homeowner borrow more than a standard home-equity product would allow.
The conditions are specific. You have to own and occupy a single-family home as your primary residence, meet income guidelines that vary by location, and the money can only go to ADU construction. One requirement drives the whole timeline: you must have all plans, permits, and pre-development materials in hand and be ready to move forward with construction before you apply, and a project started before closing is not eligible. The loans run through a network of participating lenders across the state, including ones serving Plymouth County and the South Shore.
The Home Modification Loan Program: the aging-parent option
If the reason for the ADU is that an older or disabled family member needs to live on the property, look at the Home Modification Loan Program first, because it is cheaper money for exactly this case. MassAbility's HMLP provides a zero-interest, deferred-payment loan for modifications that can include accessory dwelling units, alongside bathroom and kitchen upgrades and ramps (Mass.gov, Home Modification Loan Program). It runs up to $50,000, carries no interest and no monthly payments, and is not repaid until the home is sold or transferred. Eligibility turns on a household member who is over 60 or has a disability, documentation of need, and income limits.
The trade-off between the two is straightforward. HMLP is the better money - zero interest, no payments - but it caps at $50,000 and requires the disability-or-age basis. The MassHousing loan carries a market interest rate but reaches up to $250,000 and does not require anyone in the household to be older or disabled.
How the two fit together
For a family building an ADU so a parent can age in place, the sequence usually looks like this. If the whole project fits inside $50,000 - often true for an internal conversion of existing space - HMLP alone may cover it at zero interest. If it is a larger detached build, HMLP can cover the first $50,000 on the best possible terms and the MassHousing loan can cover the rest, or the MassHousing loan can carry the whole thing if the HMLP eligibility basis does not apply.
Either way, the move that has to come first is not choosing a lender. It is getting the town's permit and your plans in hand, because the MassHousing loan will not close without them, and knowing your real construction number is what tells you which program, or which combination, you actually need.
Related: how an ADU project works, and how we match you with a builder who has done them on the South Shore.