ADUs and in-law apartments in New Hampshire

What does New Hampshire law allow?

Since July 1, 2025, towns and cities with zoning must allow one accessory dwelling unit (ADU), attached or detached, as a matter of right in every district that allows single-family homes. Under RSA 674:72, a town:

• May require the owner to live in either the main home or the ADU, but can't say which one
• Can't hold an ADU to less than 750 square feet, and unless it allows more, an ADU can be up to 950 square feet
• Can't require the people living in the ADU to be related to the owner, or limit the ADU to one bedroom
• May require up to one extra parking space
• Can't require separate water or sewage systems, though the systems must meet state rules
• Must allow an ADU made from an existing building, including a detached garage, even if that building doesn't meet current setback or lot coverage rules, as long as it's a preexisting nonconforming structure
• Can't deny a separate electrical panel and service for the ADU

An ADU can't be sold separately from the main home as a condominium unless the town allows it. Your town's zoning office has the local details.

How do lenders look at a home with an ADU?

FHA and Fannie Mae both treat a single-family home with one ADU as a one-unit property, not a two-family. Fannie Mae allows only one ADU on the lot, doesn't allow ADUs with two- to four-unit homes, and expects the ADU's kitchen to have cabinets, a countertop, a sink with running water and a stove or stove hookup. The appraiser looks at whether the ADU meets local zoning and how the home compares with similar homes.

An ADU built without permits can complicate the appraisal and the loan, so ask the seller for permits early.

Can ADU rent help you qualify?

Sometimes. For FHA loans, HUD lets lenders count rent from an ADU on a one-unit home. With little or no rental history, the lender uses 75% of the lower of the appraiser's market rent or the lease, and ADU rent can't be more than 30% of the income used to qualify. Fannie Mae's HomeReady program can count ADU rental income for buyers who qualify for HomeReady. Rules differ by program and lender, so Tom checks them for your situation.

How can I finance a new ADU?

If you want to add an ADU, these could work:

• Renovation loans. Fannie Mae's HomeStyle Renovation lets buyers and owners of a one-unit home finance building or installing a new ADU as part of a purchase or refinance.
• Construction-to-permanent loans for building a new home and an ADU together.
• Cash-out refinance or a HELOC to use the equity you have. See HELOC vs cash-out refinance.

Get your town's permit requirements and a builder's estimate before you apply, since a renovation loan is based on the plans and their cost. Service Connect lists local home pros, including contractors, as they join.

What about wells and septic?

A town can't require a separate system for the ADU, but the existing well and septic system still have to meet state rules for the added use. The well and septic guide explains the basics.