How to get $80K from the city to build an affordable rental unit in your backyard
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The City of Charlotte is now offering $80,000 forgivable, interest-free loans to property owners who build small, affordable rental homes on their land.
Why it matters: For the city, the new Queen City ADU Program helps address the deepening affordable housing crisis. For homeowners, it's a chance to earn extra income from their backyard.
Context: Accessory dwelling units, or ADUs, could be a converted basement or a standalone backyard building. The home has to have a kitchen, bathroom, sleeping area and separate entrance. They typically work well for seniors and single residents.
How it works: To be eligible for the city financing, owners must rent their ADUs to residents earning no more than 80% of the area median income ($62,850 for a single person or $89,750 for a family of four).
- Rent must be capped at the "Fair Market Rent" for a studio at 70% AMI, which currently would be $1,099, per the city's zoning administration manual.
- The loan is forgiven at $10,000 per year of affordability, up to eight years.
- For faster forgiveness, landlords may lease to voucher holders or residents referred by supportive service agencies or the city's housing partners and receive up to $15,000 annually.
By the numbers: Building an ADU costs around $90,000 to $250,000, depending on the size, design and materials, per the city's estimates.
- From design to move-in, the construction process could take six months to two years.
The big picture: Charlotte's housing affordability crisis continues to worsen. More than half (51%) of the metro area's renters are cost-burdened, meaning more than 30% of their income is spent on housing.
- Mecklenburg County produced 11,500 fewer housing units than it needed to keep up with growth over the past decade. To catch up, it needs 10,600 new housing units a year.
What's next: Homeowners can apply here through the city's Housing and Neighborhood Services Department.