Housing construction, homeowners benefit from loan programs for ADU construction


Editor’s Note: This story has been updated to correct the name of one of the banks that offer loans to homeowners looking to build additional housing units. First Citizens’ Federal Credit Union is one of the banks now offering such loans on Cape Cod.

When Alisa Magnotta and employees at Housing Assistance Corporation began researching why there were no additional housing units (ADUs) in the Cape, they learned that traditional borrowing options were holding some homeowners back.

They turned to local lenders for help, Magnotta said. Now Cape Cod 5, First Citizens’ Federal Credit Union and the Cooperative Bank of Cape Cod offer products for homeowners who want to build ADUs — an affiliated entity is an example of an ADU — but might not otherwise be able to.

Each bank’s offer is different and depends on the homeowner’s situation and the nature of their equity. Homeowners can refinance their homes, take out home equity lines of credit, or home equity loans.

“They all want to bring more housing online,” Magnotta said. “They want to help their clients and homeowners in the Cape be successful.”


Magnotta said having the right type of loan that can make year-round living possible is a great tool. It will help customers and homeowners in the Cape and bring more housing online, she said.

Nine Cape cities have enacted additional housing unit statutes to address the housing shortage. While bylaws vary from city to city, the loan products require the ADUs to be used for year-round rather than short-term rentals.

The Housing Assistance Corporation has been at the forefront of affordable housing since 1974. Today, it offers an incentive program for people to build ADUs, a tech assistance program that guides homeowners through the construction process, and a verification process to ensure tenants and landlords are playing a good game.

More:Barnstable proposes ADU ordinance, zoning changes to increase housing units

“We wanted to make it easier for homeowners to say yes to housing,” Magnotta said.

HAC motivated homeowners to be part of the solution by providing them with technical assistance, incentive payments and credit products they said were modeled after the solar industry.

“We hope to develop a scalable program that we can take beyond the Cape,” Magnotta said.

Local lenders are vital to the effort.

More:Housing issues: Can a new charter help Wellfleet solve a crisis for workers and residents?

The Cooperative Bank of Cape Cod has introduced flexible qualification policies, including considering an applicant’s projected rental income in addition to their existing income.

Expected income usually can’t be factored in, but community banks have more flexibility, according to Shanika Rogowski, senior vice president and chief residential lending officer at Coop.

“We hope this opens the door to entry for many people who may not have had that option,” Rogowski said.

Banks use city criteria for long-term leases. They work with local appraisers to determine reasonable rental amounts. What makes the loan products unique is that they work with affordable housing efforts by charging year-round rents.

“A great thing about living and working in the Cape is the people and the community,” said Magnotta. “We are problem solvers.”

She points to the controversy surrounding so many affordable housing projects, including Twin Brooks in Hyannis and Cloverleaf in Truro. It would take millions of dollars, millions in subsidies, and between three and five years to build 150 homes, she said

More:To understand Cape Cod’s housing crisis, look at what’s happening in Twin Brooks

“But if every city encouraged 10 homeowners to build ADUs, we could have 150 homes in less than a year,” Magnotta said. “Without tax money. You have a real solution.”

Further information is available at https://haconcapecod.org or directly from the banks mentioned.

Contact Denise Coffey at [email protected]


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