ADU Loan Pilot Program Info:
What is the ADU Loan Pilot Program?
The City of Durham is launching a new pilot loan program to help homeowners build accessory dwelling units (tiny homes) and rent them affordably. Under this program, eligible homeowners receive a 30-year loan at 2% interest to cover construction costs of a backyard ADU. In return, homeowners agree to a 30-year affordability commitment—renting the new unit to households earning up to 80% of Area Median Income (AMI).
In short, we finance the ADU so that neighbors can gain extra income and our community gains more affordable housing. The program has $1.75 million set aside for this pilot period.
Benefits to Homeowners and Tenants:
This pilot is win-win.
Homeowners get a low-interest loan to build a tiny home and create stable rental income, while tenants get safe, affordable housing. Studies note that ADU’s create “a source of stable rental income for moderate-income homeowners”. For this program, Coram Houses has developed an ADU design of a 300 sqft. unit that costs roughly $80,000 to build.
For tenants, ADUs offer “an alternative housing type and potentially wider range of neighborhoods”– a private, community-based home at below-market rent. Building one ADU at a time, the pilot “increases affordable housing options” in Durham.
Eligibility & How It Works:
To participate, a homeowner must own and reside at a lot within Durham city limits and intend to rent the ADU at ≤80% AMI rent for the duration of the loan (30 years). The property must meet local zoning (single-family lot). Renters of the ADU must earn at or below 80% AMI, ensuring long-term affordability. Applications will be entered into a tiered lottery to ensure equitable disbursement of funds.
Properties owned by corporations, business entities, or investors who do not reside at the home are not eligible.
Here’s the process:
Application: Throughout the application period, homeowners will apply through our online Homeowner Application (see below). Coram Houses will review applications for eligibility and enter them into each tier for which they are eligible. The lottery selection will take place through a third party application, and those who are selected will be notified.
Building the ADU: Coram Houses will coordinate design, permits, and construction.
Tenant Placement: Once built, the homeowner selects a tenant who meets income criteria (with our help). We provide lease guidance so rents stay affordable.
Loan Repayment: The homeowner pays back the loan over 30 years at the subsidized rate. After ~30 years, the loan is repaid and the home remains a permanent affordable housing unit (or the owner can keep it as income property).
We’re also building a list of tenants. If you need an affordable home, fill out the Tenant Interest Form (below). We’ll ask for name, contact info, current living situation, and income bracket. When an ADU becomes available, we’ll match tenants and explain next steps.
See the Program Manual (below) for more detail.