How do you finance an ADU in Utah?

What am I actually financing: the home, or the whole project?

The whole project. The home is the clean number: a Cocoon 300 Series is typically $84,000, the 200 Series typically $73,000 and the 500 Series typically $109,000. Site work, utility connections and city fees add 35 to 50 percent on top, which puts a 300 Series ADU at about $113,000 to $126,000 all in. City costs alone, for plan review, permits, inspections, impact and connection fees, run $3,500 to $9,000.

Across our floor plans, a Cocoon ADU in Utah typically lands between $85,000 and $200,000 all in, and premium two-story builds go past $300,000. A traditional custom-built ADU in Utah runs $200,000 to $400,000 and up.

Bring your lender the all-in figure, not the home price. Our Utah ADU cost breakdown has the line items.

Which loan should I use to build an ADU in Utah?

Five paths cover almost every Utah homeowner. Which fits depends on your equity and whether you want to touch your mortgage.

A HELOC is the most common choice among Cocoon customers. There is a lot of equity to draw on: mortgage holders' equity hit a record $18 trillion in July 2026, according to ICE's August 2026 Mortgage Monitor.

We work with lender partners who have financed our builds before, and we hand you a line-itemed project figure a loan officer can underwrite.

Is there a Utah program that lends specifically for ADUs?

Yes, and few homeowners know about it. Salt Lake City's Community Reinvestment Agency runs the Backyard Keys ADU Loan Program, administered by the nonprofit Community Development Corporation of Utah: up to $200,000 at 3% fixed, a 5-year term with a 5-year extension option, amortized over 30 years, and up to 10 percent forgiveness on rent-restricted units (SLC CRA, Backyard Keys).

The conditions are real. The home has to be your primary residence and sit west of I-15 in Salt Lake City, with priority in the 9-Line Community Reinvestment Area, where ADU funding is set aside. There is a $2,000 application and origination fee that can roll into the loan, plus $200 a year for affordability compliance, and you complete the city's Good Landlord training and financial counseling. Households at or below 80 percent of Area Median Income face no rent restrictions. Above 80 percent AMI, you rent either the main house or the ADU at a price affordable to someone earning 80 percent AMI or less.

Applications are rolling as funding allows, and the pilot covers a limited number of loans. At 3% fixed, it costs less than half what a HELOC does today, so if you qualify, join the interest list first.

Can the ADU's rent help me qualify for a loan?

Sometimes, and the rules changed this year. Fannie Mae now lets ADU rental income count toward qualifying income, effective with the Desktop Underwriter 12.1 release in March 2026 (Pennymac announcement 26-29). The limits: the ADU income used can't exceed 30 percent of your total qualifying income, the property must be a one-unit principal residence, the income can come from only one ADU, and the loan has to be a purchase or a limited cash-out refinance.

Note that last condition: it helps when you buy a home that already has an ADU, not automatically on the loan you take out to build one. Ask your lender whether yours qualifies.

The rent itself is real either way. ADU rents along the Wasatch Front run $1,200 to $2,500 a month, and a one-bedroom typically $1,200 to $1,500. We work the numbers on our ADU rental income page.

Does the new federal ADU loan law apply to my build?

Probably not. The 21st Century ROAD to Housing Act became law on July 11, 2026. Its Section 303 updates FHA lending rules to allow home improvement loans for manufactured homes used as accessory dwelling units (Terner Center).

A Cocoon ADU is not a manufactured home. Our own Utah crew builds it on-site on a permanent foundation on your property, permitted and inspected to residential code, so it is financed like any other permitted addition to your home.

How is financing a tiny home on wheels different?

Completely, because the collateral is different. A Cocoon tiny home on wheels is shop-built in Utah on a custom steel chassis and delivered towable. It isn't real property, so home equity products generally don't apply. Those homes are financed with RV, asset-based or business loans.

That's the trade-off. A tiny home on wheels is simpler to place, while a permitted ADU on a foundation is real property and opens up real-estate financing. Utah's SB 284 (Utah Code 10-21-304), in effect since October 1, 2026, requires the cities it covers to permit one detached ADU on a lot of 11,000 square feet or more that has a single-family home, while still letting them regulate its size, setbacks, height and owner occupancy. Check your city on our Utah ADU rules by city tracker, and compare the two on our ADU vs tiny home page.