Accessory Dwelling Unit (ADU)

AAA

DEFINITION of 'Accessory Dwelling Unit (ADU)'

A legal and regulatory term for a secondary house or apartment with its own kitchen, living area and separate entrance that shares the building lot of a larger, primary house. The ADU may be attached to an existing house or garage, or it may be built as a stand-alone unit, but it usually uses the water and energy connections of the primary house and may be rented separately.

INVESTOPEDIA EXPLAINS 'Accessory Dwelling Unit (ADU)'

Since the post-World War II housing boom, most residential areas in the United States were zoned to limit density and control the size and separation of single-family dwellings. More recently, as cities and older suburbs have needed to contain urban sprawl, yet provide for population growth and economic diversity within their communities, zoning changes in a growing number of places have permitted the addition of Accessory Dwelling Units. The new zoning rules usually limit the size and general style of the new unit and require that the owner live on the property. 

Some cities, such as Portland, Ore., have lowered the cost of building permits for ADUs, further encouraging construction of these units.

RELATED TERMS
  1. No-Appraisal Refinancing

    A type of mortgage for which the lender does not require an independent, ...
  2. No-Appraisal Loan

    A mortgage that does not require an appraisal of the property’s ...
  3. FHA Streamline Refinance

    A mortgage-refinancing option offered by the Federal Housing ...
  4. USDA Rural Refinance Pilot Program

    A mortgage-refinancing option offered in some states and territories ...
  5. Asset Protection

    The concept of and strategies for guarding one's wealth. Asset ...
  6. In Escrow

    An item such as money or a piece of property that has been transferred ...
RELATED FAQS
  1. What price-to-book ratio is considered average in the chemicals sector?

    You can use Microsoft Excel to calculate the loan-to-value ratio if you have the mortgage amount and appraised value of a ... Read Full Answer >>
  2. Do mortgage escrow accounts earn interest?

    A bank is not required to pay interest on any escrow accounts (also mortgage impound accounts) it holds for its customers. ... Read Full Answer >>
  3. How does the loan-to-value ratio affect my mortgage payments?

    Several factors affect the mortgage rate you can obtain when you purchase a home. Lenders analyze credit histories and scores ... Read Full Answer >>
  4. What is the difference between a PMI (primary mortgage insurance) loan and a Federal ...

    Home buyers who are unable to contribute a traditional down payment of 20% may think home ownership is out of reach. However, ... Read Full Answer >>
  5. What are the best ways to pay off my mortgage quickly?

    There are two main strategies for paying off a mortgage more quickly, which can be used alone or in tandem: making larger ... Read Full Answer >>
  6. How can a reverse mortgage help wealthy and poor retirees?

    Reverse mortgages can help both wealthy and poor retirees, as they allow seniors to borrow against their home equity, receiving ... Read Full Answer >>
Related Articles
  1. Home & Auto

    5 Ways To Make Your Home Remodels Pay Off

    Here are five ways to make your home renovation worth the money and effort you put into it.
  2. Personal Finance

    Bathroom Remodeling On A Budget

    These cheap and simple changes will make your bathroom look like a million bucks.
  3. Home & Auto

    Will Your Home Remodel Pay Off?

    Some renovations will mean a bigger sale price on your home, while others will just cost you.
  4. Home & Auto

    Remodeling The Housing Finance Industry

    The meltdown in mortgage-backed securities is bringing about reform in home financing.
  5. Home & Auto

    7 Ways To Save On Home Remodeling

    More homeowners are remodeling their homes instead of moving, but remodeling jobs can quickly become expensive nightmares.
  6. Home & Auto

    Low-Cost Curb Appeal Projects For Your Front Yard

    Some low-cost improvements to your home's exterior and front yard could increase its curb appeal and ensure a great first impression on buyers.
  7. Home & Auto

    Buying a Home? The Best Places Share This Feature

    The most lucrative areas to invest in a home are cities where job growth is robust.
  8. Credit & Loans

    What is an Unsecured Loan?

    An unsecured loan is based on the creditworthiness of the borrower, and has no collateral securing the loan.
  9. Home & Auto

    Swimming Pools: Costs Vs. Long-Term Value

    Consider the costs of installing and maintaining a swimming pool, and compare this with the pool's utility and the market value it adds to your home.
  10. Home & Auto

    Reduce Energy Costs By Making These Adjustments

    There are several ways you can reduce energy costs. These techniques range from minor tweaks to major renovations.

You May Also Like

Hot Definitions
  1. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  2. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  3. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  4. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
  5. Moving Average - MA

    A widely used indicator in technical analysis that helps smooth out price action by filtering out the “noise” from random ...
  6. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
Trading Center