Thinking about adding an accessory dwelling unit to your Boulevard Bluffs property but not sure how to pay for it? You’re not alone. An ADU can offer flexible living space and potential rental income, but the path to financing can feel complex. In this guide, you’ll learn practical funding options, the steps lenders care about, what to expect with permits and appraisals in Everett, and how to plan a realistic timeline and budget. Let’s dive in.
What counts as an ADU
An accessory dwelling unit is a secondary home on the same lot as your primary residence. It can be a detached cottage, an addition attached to your home, or a conversion of existing space like a basement or garage. Each must have independent living facilities, including a kitchen, bathroom, and a place to sleep.
In Everett, details such as the number of ADUs allowed per lot, owner-occupancy rules, setbacks, parking, and utility standards can affect your plan. The client’s brief indicates Everett may allow up to two ADUs per lot, but you should confirm all current rules directly with the City of Everett before you apply for financing. Local regulations can change and they influence whether lenders will underwrite your project.
Why local rules affect financing
Lenders want to know that your ADU will be permitted, built to code, and insurable. That’s because permitability and code compliance can influence your appraisal, your permanent loan terms, and your property taxes. You should be ready to share your permit plan, contractor credentials, and a clear scope of work so your lender and appraiser can evaluate the project accurately.
If your design anticipates more than one ADU, expect extra review. Appraisers may have fewer comparable sales to work with and lenders may check utility capacity, parking, and other density-related requirements. Confirm these early so you avoid delays or changes to your loan amount.
ADU financing options compared
Different loans fit different projects. Use this overview to match your plan to the right product. Availability and terms vary by lender, so speak with a mortgage professional experienced in ADUs in Snohomish County.
Cash or personal funds
- Pros: No lender fees or draw schedules, and no new lien beyond any existing mortgage.
- Cons: Ties up your savings and has an opportunity cost.
- Best for: Smaller conversions or light remodels where costs are easier to control.
Home equity loan or HELOC
- Pros: Uses existing equity, can be relatively fast to close, and HELOCs let you draw as you go.
- Cons: Secured by your home; HELOC rates may be variable; you must qualify based on equity, income, and credit.
- Lender focus: Combined loan-to-value limits and, in some cases, documentation of how funds will be used.
Cash-out refinance
- Pros: One mortgage with funds for construction; potential to improve your overall rate and payment structure.
- Cons: Closing costs and a reset of your mortgage term; full income and credit qualification required.
- Lender focus: Your current rate and terms, loan-to-value, and seasoning rules.
Construction or construction-to-permanent loans
- Pros: Designed for ground-up or substantial projects; a single-close option can convert to a permanent mortgage when the ADU is complete.
- Cons: More paperwork, higher interest during construction, and draw inspections.
- Lender focus: Licensed contractor credentials, detailed cost breakdown, permits, draw schedules, and inspections.
Renovation mortgages
These pair purchase-plus-renovation or refinance-plus-renovation funds in one loan. They escrow the construction budget and release it as work is completed.
Government and special programs
- VA rehabilitation options: For eligible veterans, certain VA programs can finance repairs or rehab; program specifics vary.
- USDA: Less common near suburban Everett, but can apply in qualifying rural areas.
- State and local incentives: Washington State and local jurisdictions periodically offer incentives, fee reductions, or technical assistance for ADUs. Confirm current offerings with the City of Everett, Snohomish County, and the Washington State Department of Commerce.
- Washington State Housing Finance Commission: May offer homeowner assistance or products that work alongside renovation financing.
Private and portfolio construction lenders
- Pros: More flexible underwriting for unique designs or owner-builders.
- Cons: Typically higher rates and fees, with shorter terms. Do extra due diligence on terms and timelines.
Appraisals and valuation in Everett
Appraisers use a mix of methods to value properties with ADUs. Understanding these approaches helps you set expectations with your lender.
- Cost approach: Useful when the ADU is new. The appraiser estimates replacement cost less depreciation, then reconciles with other methods.
- Income approach: If the ADU will be rented, some lenders consider actual or projected rent when supported by market data. Rules vary on whether projected rent can help you qualify.
- Sales comparison approach: Appraisers look for nearby sales with similar ADUs. If two-ADU properties are rare, they may rely more on cost and income approaches.
Most lenders require that ADUs be fully permitted and code compliant. Unpermitted space can be excluded from value or disqualify certain loans. If your project is in progress, the timing of the appraisal matters. A construction or renovation loan may be based on the after-improved value, while permanent financing uses the finished home with a final certificate of occupancy.
Permits, timelines, and lender milestones
Your lender’s disbursements and your contractor’s work must align with the city’s permitting and inspection process. Build a buffer for each step.
- Pre-planning and feasibility, 2 to 8 weeks: Verify zoning, lot coverage, setbacks, parking, and utility capacity. If you have an HOA, review any restrictions.
- Design and permit application, 4 to 12-plus weeks: Create plans and submit. City review time depends on workload and completeness.
- Permit issuance, 1 to 8-plus weeks: Respond to corrections and coordinate with your contractor.
- Construction, 3 to 12-plus months: Timelines vary by size, scope, and contractor availability.
- Final inspections and occupancy: Needed for final draw releases and to convert short-term construction financing to a permanent loan.
How this ties to your loan:
- Construction and renovation loans release funds in stages after inspections.
- Single-close construction-to-permanent loans convert after final inspection and, often, a final appraisal.
- Delays in permitting or inspections can increase interest costs during construction. Include contingency time and budget.
Budget: typical costs to plan for
Every ADU is different, but most projects include the following categories. Local labor and material costs fluctuate, so it’s smart to get multiple Snohomish County contractor bids and include a 10 to 20 percent contingency.
- Design and permits: Architect or engineer, plan checks, and any impact fees if applicable.
- Site and utilities: Sewer, water, electric, and potential lateral upgrades.
- Structure and finishes: Foundation, framing, insulation to local energy code, HVAC, windows, and interior finishes.
- Life-safety: Egress, fire separation, and any accessibility requirements depending on your plan.
- Soft costs and overhead: Contractor overhead and profit, sales tax, permit and inspection fees.
- Exterior items: Parking, stormwater mitigation, landscaping, and any tree-related work.
Detached ADUs typically cost more than interior conversions because they require their own foundation and often separate utility connections. Conversions can be more budget-friendly if existing layout and structure cooperate.
Smart steps to strengthen your loan file
- Get lender pre-approval early: Confirm borrowing capacity and discuss the best product for your plan.
- Assemble a clear scope and budget: Detailed contractor bids, a line-item budget, and a draw schedule help the appraiser and underwriter.
- Confirm permit path with the city: Document zoning, setbacks, and utility capacity. If Everett allows more than one ADU on your lot, note any added requirements.
- Plan your timeline: Share the contractor’s schedule with your lender and build in buffer time.
- Line up insurance and taxes: Talk to your insurer about dwelling and liability coverage. Expect assessed value and property taxes to change after completion, and contact the Snohomish County Assessor for guidance.
Local resources to confirm before you apply
- City of Everett Planning and Community Development: Current ADU rules, permit fees, and processing times.
- Snohomish County Assessor and permitting: Property tax impacts and utility considerations.
- Washington State Department of Commerce: State guidance and any ADU-related incentives or pilot programs.
- Washington State Housing Finance Commission: Programs that can pair with renovation financing or homeowner assistance.
- Local lenders and brokers: Seek those with construction-to-permanent and renovation loan experience for ADUs in Everett.
Next steps for Boulevard Bluffs homeowners
If you’re planning an ADU in Boulevard Bluffs, start with feasibility and financing in parallel. Confirm your lot’s eligibility, gather bids, and choose a lender comfortable with ADUs. With a clear plan, you can align permits, funding, and construction to stay on time and on budget.
Ready to map out your ADU financing and explore how it could impact your home’s value? Request your complimentary home valuation with Adam Cobb & Team. We’ll walk your property, discuss timelines, and help you connect with trusted local resources.
FAQs
What is an ADU and how is it used?
- An ADU is a secondary home on the same lot as your main residence, such as a detached cottage, an attached addition, or a basement or garage conversion with its own kitchen, bath, and sleeping area.
Which loans are most common for ADUs in Everett?
- Home equity loans or HELOCs, cash-out refinances, construction-to-permanent loans, and renovation mortgages like FHA 203(k), HomeStyle, or CHOICERenovation are commonly used.
Can I count projected ADU rent to qualify for a loan?
- Some lenders allow projected rental income supported by market data, while others require actual leases; policies vary by program, so ask your lender how they treat ADU rent.
Will an ADU change my property taxes in Snohomish County?
- ADUs often increase assessed value, which can raise property taxes; contact the Snohomish County Assessor to understand how a finished ADU could affect your assessment.
How does building two ADUs affect financing?
- If local code permits two ADUs, appraisals can be more complex due to limited comparable sales, and lenders may require added checks on utilities, parking, and compliance.
What timeline should I expect from permit to completion?
- Many projects run from several months to over a year, with time needed for feasibility, design, permit review, construction, inspections, and final occupancy before permanent financing can close.
