FAQs

Please note that at this time we have created 30 ADUs in in our Pilot phase, and we have paused our program as we seek additional capital for our loan fund. We hope to continue our success soon.

We get it: There’s a lot to consider when contemplating adding an ADU to your property. The good news? It’s our goal to make doing so as affordable and stress-free as possible. Take a look at the questions below, and if anything is left unanswered, please contact us any time.

Frequently Asked Questions

First things first, what’s an ADU?

ADU stands for Accessory Dwelling Unit. By definition this refers to a free-standing or attached residential unit, either inside an existing home or on a separate foundation. Freestanding ADUs usually range between 300 and 800 square feet and are typically located in the backyard or another area of one’s property. In not-so-technical terms: An ADU is a separate living space on your property.

Is that different from a BackHome ADU?

BackHome ADU is the name of our company. You can get more details about our story here. Our ADUs (studio, one- or two-bedroom) are not physically connected to your home, have a full kitchen, bath, heating, and air conditioning.

Why would I want a BackHome ADU on my property?

For the benefits! These include supplemental monthly cash flow (with little cash required up front), an extra living space for family and friends (perfect for having them close by while keeping their independence), a value-add to your property, and a difference in the community. 

What kind of a difference in the community?

BackHome ADUs quickly and conveniently add affordable housing in neighborhoods people want to live in. It’s the number one reason why we believe in ADUs.

How is BackHome ADU different from everyone else?

Because of our background. We come from two non-profit organizations whose mission is to create and preserve more affordable housing and add resiliency for homeowners. To make this happen we are providing financial benefits to homeowners by underwriting the program for lower prices and lower interest rates than are currently available in the market. 

How do I get started?

The first step is an easy one: Connect with our team. We’ll then conduct a site evaluation, and schedule consultations with our builder partner and our lender partner. 

Is this program offered in a specific area?

Yes, this pilot program is offered in Multnomah, Clackamas, and Washington Counties in Oregon.

How long until my ADU is move-in ready?

There are plenty of factors to consider, but on average (depending on the model you choose and the nature of your lot, of course) the process takes between five and eight months from start to move-in.

Are there any requirements or restrictions I should know about?

Yes. In exchange for our assistance and access to our financing and partner programs, we ask that you rent the ADU to a household earning no more than 80% Area Median Income (AMI) for 8 years. These rental rate figures are provided by HUD each year. To enforce this agreement, we will record an “Affordable Housing Restrictive Covenant” on you property.

Why below 80% AMI?

The City of Portland considers 80% AMI to be the threshold of affordable housing.  Our goal is to provide affordable housing solutions. This mark allows us to make that happen.

While we ask that you agree not to exceed this amount, you have the option to rent your ADU for a lower rent which will provide even higher affordability.

Can I choose who lives in the ADU?

If you have someone in mind that meets the above income requirements (making no more than 80% AMI), the choice is yours. Otherwise, our property management partner will market and rent your ADU for you, and all local rental rules apply. Learn more at Living Room Property Management.

Can I use the ADU as a short-term rental, like Airbnb? 

Negative. Our ADUs can only be used for regular, full-time occupancy.

How much does it all cost?

Costs always vary based on unit size and the options selected, but we estimate that total ADU cost for construction and development will range between $130,000 and $170,000 (and it could be more or less depending on several factors).  Total out-of-pocket cash required from the homeowner should be less than $2,000 when using our program.  You’ll get more accurate estimates after speaking with our building and lending partners.

BackHome ADU charges a $7500 Consulting Services fee that is typically included as a project cost, and financed with the loan.

Most builders charge a deposit to get started, and buyers can get that back when they close their loan, if desired.

Does the ADU come with any warranties?

Yes! All BackHome ADUs come with warranties. Details are available from our building partners.

I’ve got plenty of space. Can I have more than one BackHome ADU?

In Portland, yes. You can place up to four units on any given lot (assuming they all fit within local zoning requirements). There are several factors that determine how many ADUs you can place in your yard, including the physical characteristics of your lot, the local regulations, zoning, and so forth. 

What are my ADU build choices?

For more specifics, take a look at our partners page or talk to a member on our team.

What happens if I don’t like my tenant?

We’re all human, and conflicts happen. If that’s the case, your property management company will act on your behalf to resolve any issues (in accordance with state and local rules and regulations).

Do I have to use a property management company? 

Yes. Partly to make things simple, and partly to ensure every provision and promise is maintained. This is required for eight years, per the affordable housing restrictive covenant.

At what interest rate and term?

Exclusively for this BackHome ADU pilot, our lending partner, Craft3, is currently offering participants a rate of 3.49% (3.66% APR), with a 20-year loan term and no balloon payment.  For more information on the loan offering, go to https://www.craft3.org/homeowner-loans/adu-loans/backhome-adu-loans

Do I have to pay off or refinance my existing home loan?

No.  The Craft3 ADU loan may go behind your existing loan for qualified applicants.  Contact our lending partner to discuss your situation.   You should only consider refinancing your existing home if it is in your financial interest to do so.

What happens if I sell or refinance my house?

Loans are typically paid off through the home sale process. In the event of a refinance, your loan may be re-subordinated, upon approval by the primary lender and Craft3. Per the terms of the affordable housing covenant, BackHome still requires the ADU to be rented to a household making no more than 80% AMI for the remainder of the eight-year term.

Can I use the BackHome ADU program, but without the financing?

Yes. We charge a $7,500 fee for assisting you with the process. Typically, this fee would be included in the loan you get from Craft3. If you choose to not get the loan, you’d pay the fee directly to BackHome ADU in two installments—at the beginning and end of the project.

What if my tenant’s income grows above 80% AMI?

Then congratulate them! As long as they began their tenancy making less than 80%, they will not be asked to move out of the ADU.

What happens after the initial eight-year restrictive covenant period is up?

Our restrictions are removed, and you can rent the ADU to anyone in whichever way you see fit, or use it yourself.  Of course, if you are enjoying making a difference by keeping it rented as affordable housing . . . THANK YOU!  If your ADU is located in the City of Portland and you took advantage of the System Development Charge waiver, short term rental will still be prohibited for 2 more years (10 years total).