ADU Basics in Washington

Essential guide to accessory dwelling units in WA: understand zoning rules, permitting process, and practical considerations for building or buying properties with ADUs.

Tags:adu, accessory-dwelling-unit, washington-zoning, rental-income, property-investment
Share this article

You're looking at a house with a "mother-in-law unit" in the backyard. Can you rent it out? Does it add value? What are the rules? Or you own a home and want to build an ADU for rental income or aging parents. Where do you start? What does it cost?

Accessory Dwelling Units (ADUs) are becoming increasingly popular in Seattle and Washington. They provide rental income, housing for family, or flexible living space. But rules vary by city, costs are significant, and not all ADUs are created equal. Understanding the basics helps you make smart decisions whether buying a home with an ADU or building one.

In this article, you'll learn:

  • What ADUs are and types (DADU, AADU, conversion)
  • Washington state ADU laws and city-specific rules
  • Seattle's ADU regulations (2019 changes)
  • Costs to build an ADU ($150K-$400K+)
  • Financing options for ADU construction
  • Buying a home with an existing ADU
  • Rental income potential and ROI
  • Permitting and approval process

This article is for you if: You're considering buying a home with an ADU or building one on your property.

Table of Contents

What Is an ADU?

Basic Definition

Accessory Dwelling Unit (ADU):

  • Secondary dwelling on same lot as primary home
  • Complete living space (kitchen, bathroom, sleeping area)
  • Smaller than primary home
  • Also called: mother-in-law unit, granny flat, backyard cottage, in-law suite

Not the same as:

  • Bedroom or guest room (no kitchen)
  • Garage or storage (not living space)
  • Duplex (two separate properties)

Types of ADUs

1. Detached ADU (DADU):

  • Separate structure from main house
  • In backyard or side yard
  • Most common type
  • Also called: backyard cottage, carriage house

Example:

  • 800 sq ft cottage in backyard
  • Full kitchen, bathroom, bedroom, living area
  • Separate entrance
  • Own utilities (or shared)

2. Attached ADU (AADU):

  • Attached to main house
  • Separate entrance
  • Shares at least one wall with main house

Example:

  • 600 sq ft addition to side of house
  • Full kitchen, bathroom, bedroom
  • Separate entrance
  • Shared utilities

3. Internal ADU (Conversion):

  • Inside existing home
  • Convert basement, attic, or garage
  • Separate entrance (usually)
  • Most affordable option

Example:

  • Convert basement to 500 sq ft apartment
  • Add kitchen and bathroom
  • Separate entrance (if possible)
  • Shared utilities

4. Garage conversion:

  • Convert existing garage to living space
  • Add kitchen and bathroom
  • May lose parking

Example:

  • 400 sq ft garage converted to studio
  • Kitchen, bathroom, living/sleeping area
  • No longer have garage parking

Washington State ADU Laws

State-Level Regulations (2021 Law)

Washington State law (HB 1337, effective 2021):

  • Cities must allow ADUs in all single-family zones
  • Cannot require owner occupancy
  • Cannot require off-street parking for ADU
  • Streamlined permitting required

What this means:

  • All Washington cities must allow ADUs
  • More flexible rules than before
  • Easier to build ADUs

Local control:

  • Cities can set size limits
  • Cities can set design standards
  • Cities can set setback requirements
  • But: Must allow ADUs

Common State Requirements

Across Washington, ADUs typically:

  • Must be on lot with single-family home
  • Must have separate entrance
  • Must have full kitchen and bathroom
  • Must meet building codes
  • Must be permitted

What varies by city:

  • Size limits
  • Setback requirements
  • Design standards
  • Number of ADUs allowed
  • Owner occupancy (most cities don't require)

Seattle ADU Regulations

2019 Rule Changes

Seattle made major changes in 2019:

  • Removed owner-occupancy requirement
  • Allowed two ADUs per lot (one attached, one detached)
  • Removed parking requirements
  • Increased size limits
  • Streamlined permitting

Result:

  • ADU construction increased 300%+
  • Easier and more affordable to build
  • More rental housing created

Current Seattle Rules (2025)

Number of ADUs:

  • Two ADUs allowed per lot
  • One attached or internal
  • One detached
  • Or: Two internal/attached (no detached)

Size limits:

Detached ADU (DADU):

  • Max 1,000 sq ft (lots under 4,000 sq ft)
  • Max 1,200 sq ft (lots 4,000-7,999 sq ft)
  • Max 1,400 sq ft (lots 8,000+ sq ft)

Attached/Internal ADU (AADU):

  • Max 1,000 sq ft
  • Or: 40% of primary dwelling size (whichever is greater)

Height limits:

  • Detached ADU: Max 18 feet (one story)
  • Or: Max 23 feet (two stories, if lot is 4,000+ sq ft)

Setbacks:

  • Rear: 5 feet minimum
  • Side: 5 feet minimum
  • Front: Same as primary home

Lot coverage:

  • ADU counts toward lot coverage limit
  • Typically 35-40% max lot coverage
  • Includes primary home + ADU + other structures

Parking:

  • No parking required for ADU
  • Even if you remove garage for ADU

Owner occupancy:

  • Not required
  • Can rent both primary home and ADU
  • Or: Live in one, rent the other

Design standards:

  • Must match primary home (generally)
  • Roof pitch, siding, windows
  • Some flexibility allowed

Seattle example:

  • Lot: 5,000 sq ft
  • Primary home: 2,000 sq ft
  • Can build: 1,200 sq ft DADU + 1,000 sq ft AADU
  • No parking required
  • Don't need to live in either

Seattle Permitting Process

Step 1: Pre-application meeting (optional but recommended)

  • Meet with city planner
  • Discuss your plans
  • Get feedback
  • Free

Step 2: Design ADU

  • Hire architect or use pre-approved plans
  • Must meet code and design standards
  • Get cost estimate

Step 3: Submit permit application

  • Online or in person
  • Include plans, site plan, elevations
  • Pay permit fee ($2,000-$5,000)

Step 4: Plan review

  • City reviews plans
  • May request changes
  • Typically 4-8 weeks

Step 5: Permit issued

  • Pay additional fees
  • Get permit
  • Can start construction

Step 6: Construction

  • Hire contractor
  • Build ADU
  • Inspections during construction

Step 7: Final inspection

  • City inspects completed ADU
  • Issues certificate of occupancy
  • Can now occupy or rent

Total timeline: 6-12 months (design to completion)

Other Washington Cities

Bellevue

Rules:

  • One ADU per lot
  • Max 1,000 sq ft
  • Owner occupancy required (as of 2025)
  • Parking: One space required
  • More restrictive than Seattle

Tacoma

Rules:

  • Two ADUs per lot (one attached, one detached)
  • Max 1,200 sq ft (detached)
  • No owner occupancy requirement
  • No parking required
  • Similar to Seattle

Redmond

Rules:

  • One ADU per lot
  • Max 1,000 sq ft
  • No owner occupancy requirement
  • Parking: One space required
  • Moderate restrictions

Kirkland

Rules:

  • One ADU per lot
  • Max 1,000 sq ft
  • No owner occupancy requirement
  • No parking required
  • Moderate restrictions

Everett

Rules:

  • One ADU per lot
  • Max 900 sq ft
  • No owner occupancy requirement
  • Parking: One space required
  • Moderate restrictions

Olympia

Rules:

  • Two ADUs per lot
  • Max 1,200 sq ft
  • No owner occupancy requirement
  • No parking required
  • Similar to Seattle

Key takeaway: Rules vary significantly by city. Check your city's specific regulations before planning an ADU.

Costs to Build an ADU

Detached ADU (DADU) Costs

Total cost: $150,000-$400,000+

Breakdown:

Design and permits ($10,000-$25,000):

  • Architect/designer: $5,000-$15,000
  • Structural engineer: $2,000-$5,000
  • Permit fees: $2,000-$5,000
  • Survey: $500-$1,000

Site preparation ($10,000-$30,000):

  • Demolition (if needed): $5,000-$15,000
  • Grading: $3,000-$10,000
  • Utilities (water, sewer, electric): $5,000-$15,000

Construction ($130,000-$350,000):

  • Foundation: $15,000-$30,000
  • Framing: $30,000-$60,000
  • Roofing: $10,000-$20,000
  • Siding: $10,000-$25,000
  • Windows/doors: $8,000-$15,000
  • Plumbing: $15,000-$30,000
  • Electrical: $10,000-$20,000
  • HVAC: $8,000-$15,000
  • Insulation: $5,000-$10,000
  • Drywall: $8,000-$15,000
  • Flooring: $5,000-$12,000
  • Kitchen: $15,000-$40,000
  • Bathroom: $10,000-$25,000
  • Finishes: $10,000-$30,000

Cost per square foot: $200-$400+

Seattle examples:

Budget DADU (600 sq ft):

  • Basic finishes
  • Simple design
  • DIY some work
  • Cost: $150,000-$200,000

Mid-range DADU (800 sq ft):

  • Good finishes
  • Standard design
  • Professional contractor
  • Cost: $200,000-$280,000

High-end DADU (1,000 sq ft):

  • Premium finishes
  • Custom design
  • Top contractor
  • Cost: $300,000-$400,000+

Attached ADU (AADU) Costs

Total cost: $100,000-$250,000

Typically 20-30% less than detached:

  • Share foundation with main house
  • Share utilities
  • Less site work
  • But: More complex integration

Cost per square foot: $150-$300

Conversion ADU Costs

Total cost: $50,000-$150,000

Least expensive option:

  • Use existing structure
  • Add kitchen and bathroom
  • Minimal site work

Basement conversion (500 sq ft):

  • Add egress window: $3,000-$8,000
  • Kitchen: $15,000-$30,000
  • Bathroom: $10,000-$20,000
  • Flooring, drywall, finishes: $20,000-$40,000
  • Permits and design: $5,000-$10,000
  • Total: $50,000-$100,000

Garage conversion (400 sq ft):

  • Similar costs to basement
  • May need to add insulation, heating
  • Total: $60,000-$120,000

Prefab ADU Costs

Prefab/modular ADUs:

  • Factory-built, delivered to site
  • Faster construction (2-4 months)
  • More predictable costs
  • Growing in popularity

Cost: $100,000-$250,000 (including installation)

Seattle prefab companies:

  • Dwell Development
  • Backyard Cottages
  • Studio Shed
  • Maxable

Pros:

  • Faster (2-4 months vs 6-12 months)
  • Fixed price
  • Quality control
  • Less disruption

Cons:

  • Less customization
  • Still need permits
  • Still need site prep
  • Crane access required

Financing an ADU

Cash

Pros:

  • No interest
  • No monthly payment
  • Simplest option

Cons:

  • Ties up cash
  • Opportunity cost

When to use:

  • You have cash available
  • Don't want debt
  • Want simplest option

Home Equity Line of Credit (HELOC)

What it is:

  • Line of credit secured by home equity
  • Borrow as needed
  • Pay interest only on what you borrow

Terms:

  • Credit limit: Up to 80-90% of home value minus mortgage
  • Interest rate: Variable (currently 7-9%)
  • Draw period: 10 years (borrow as needed)
  • Repayment period: 20 years

Example:

  • Home value: $900,000
  • Mortgage: $600,000
  • Equity: $300,000
  • HELOC limit: $120,000 (80% of equity)
  • Borrow: $150,000 for ADU (need more equity or use other financing)

Pros:

  • Flexible (borrow as needed)
  • Interest-only payments during draw period
  • Only pay interest on what you borrow

Cons:

  • Variable rate (can increase)
  • Requires equity
  • Monthly payment

When to use:

  • You have equity
  • Want flexibility
  • Comfortable with variable rate

Cash-Out Refinance

What it is:

  • Refinance mortgage for more than you owe
  • Take difference in cash
  • Use for ADU construction

Example:

  • Home value: $900,000
  • Current mortgage: $600,000
  • Refinance to: $720,000 (80% LTV)
  • Cash out: $120,000
  • Use for ADU

Pros:

  • Fixed rate
  • One monthly payment
  • May get lower rate than HELOC

Cons:

  • Closing costs ($10,000-$20,000)
  • Increases mortgage balance
  • May get higher rate than current mortgage

When to use:

  • Current mortgage rate is high (can refinance to lower rate)
  • Want fixed rate
  • Have equity

Construction Loan

What it is:

  • Short-term loan for construction
  • Converts to permanent loan after completion
  • Or: Pay off with other financing

Terms:

  • Loan amount: Up to 80% of completed value
  • Interest rate: Variable during construction, fixed after
  • Term: 12-18 months construction, then 15-30 years

How it works:

  • Lender disburses funds as construction progresses
  • Pay interest only during construction
  • Converts to mortgage after completion

Pros:

  • Designed for construction
  • Only pay interest during construction
  • Can finance up to 80% of project

Cons:

  • More complex
  • Requires appraisal of completed value
  • Higher rates than traditional mortgage

When to use:

  • Don't have cash or equity
  • Building expensive ADU
  • Want to finance most of project

Personal Loan

What it is:

  • Unsecured loan
  • Fixed rate and term
  • No collateral

Terms:

  • Loan amount: Up to $100,000 (typically)
  • Interest rate: 8-15% (depends on credit)
  • Term: 3-7 years

Pros:

  • No collateral required
  • Fast approval
  • Fixed rate and payment

Cons:

  • Higher interest rate
  • Lower loan amount
  • Shorter term (higher payment)

When to use:

  • Small ADU project (under $100,000)
  • Don't have equity
  • Want fast approval

FHA 203(k) Loan (Purchase + Renovation)

What it is:

  • Mortgage that includes renovation costs
  • Buy home and build ADU with one loan
  • For buyers only (not existing homeowners)

How it works:

  • Buy home for $800,000
  • Build ADU for $150,000
  • Loan amount: $950,000
  • One monthly payment

Pros:

  • Finance purchase and ADU together
  • One loan, one payment
  • Low down payment (3.5%)

Cons:

  • Only for purchases (not existing homeowners)
  • More complex
  • FHA loan limits apply

When to use:

  • Buying home and want to add ADU
  • Don't have cash for ADU
  • Comfortable with FHA loan

Buying a Home with an Existing ADU

What to Verify

1. Is it legal?

  • Check for permits
  • Verify with city
  • Unpermitted ADU = problems

How to check:

  • Ask seller for permits
  • Check city permit records online
  • Hire inspector to verify

If unpermitted:

  • May need to legalize (expensive)
  • May need to remove (very expensive)
  • May affect insurance and financing
  • Negotiate price reduction or walk away

2. Does it meet current code?

  • Older ADUs may not meet current code
  • May be grandfathered (okay)
  • Or: May need updates

What to check:

  • Egress windows (bedroom)
  • Smoke and CO detectors
  • Electrical (GFCI outlets, grounded)
  • Plumbing (proper venting)
  • Heating (adequate)

3. What's the condition?

  • Same as main house inspection
  • Check foundation, roof, systems
  • Estimate repair costs

4. Can you rent it?

  • Check zoning (allows rentals?)
  • Check HOA rules (if applicable)
  • Check lease restrictions

5. What are the utilities?

  • Separate meters or shared?
  • Who pays utilities?
  • Separate address?

6. What's the rental income?

  • Current rent (if rented)
  • Market rent (if vacant)
  • Vacancy rate
  • Operating expenses

How ADUs Affect Home Value

ADUs typically add value:

  • Rental income potential
  • Flexible living space
  • Housing for family

Value added: 50-80% of construction cost

Example:

  • ADU construction cost: $200,000
  • Value added: $100,000-$160,000
  • Not dollar-for-dollar, but significant

Factors affecting value:

  • Quality of construction
  • Size and layout
  • Rental income potential
  • Neighborhood demand
  • Legal status (permitted)

Seattle example:

  • Home without ADU: $900,000
  • Same home with 800 sq ft ADU: $1,050,000-$1,100,000
  • Value added: $150,000-$200,000
  • ADU cost: $200,000-$250,000
  • Not full cost recovery, but adds value

Financing a Home with ADU

Conventional loans:

  • Lenders will consider rental income
  • Typically 75% of rental income counts toward qualifying
  • Need appraisal showing ADU value

FHA/VA loans:

  • More restrictive
  • May not count rental income
  • ADU must meet FHA/VA standards

Appraisal:

  • Appraiser must value ADU
  • Needs comparable sales with ADUs
  • May be challenging in some areas

Rental Income and ROI

Rental Income Potential

Seattle ADU rents (2025):

Studio (400-500 sq ft):

  • Rent: $1,200-$1,800/month
  • Depends on: location, condition, amenities

One bedroom (600-800 sq ft):

  • Rent: $1,800-$2,500/month
  • Most common size

Two bedroom (900-1,200 sq ft):

  • Rent: $2,500-$3,500/month
  • Less common, higher rent

Factors affecting rent:

  • Location (Capitol Hill > Rainier Valley)
  • Size and layout
  • Condition and finishes
  • Parking (if available)
  • Utilities included or separate
  • Yard access

Seattle neighborhoods (1-bedroom ADU):

  • Capitol Hill: $2,200-$2,800
  • Ballard: $2,000-$2,600
  • Fremont: $2,000-$2,500
  • Queen Anne: $2,200-$2,800
  • Wallingford: $1,900-$2,400
  • Beacon Hill: $1,600-$2,000
  • Rainier Valley: $1,400-$1,800

Operating Expenses

Annual expenses:

Property taxes:

  • ADU increases assessed value
  • Increases property tax
  • Estimate: $1,000-$2,000/year

Insurance:

  • Landlord policy for ADU
  • Estimate: $500-$1,000/year

Utilities (if you pay):

  • Water/sewer: $600-$1,200/year
  • Electricity: $600-$1,200/year
  • Gas: $300-$600/year
  • Garbage: $300-$600/year
  • Total: $1,800-$3,600/year

Maintenance and repairs:

  • 10-15% of rent
  • Estimate: $2,400-$4,500/year

Vacancy:

  • 5-10% of rent
  • Estimate: $1,200-$2,400/year

Property management (if hired):

  • 8-10% of rent
  • Estimate: $1,920-$2,400/year

Total operating expenses: $8,000-$16,000/year

ROI Calculation

Example: 800 sq ft DADU

Construction cost: $240,000

Annual rental income:

  • Rent: $2,200/month × 12 = $26,400
  • Vacancy (5%): -$1,320
  • Gross income: $25,080

Annual expenses:

  • Property tax: $1,500
  • Insurance: $800
  • Utilities (tenant pays): $0
  • Maintenance: $3,300 (15% of rent)
  • Vacancy: $1,320 (included above)
  • Property management: $0 (self-manage)
  • Total expenses: $5,600

Net operating income: $19,480

Cash-on-cash return:

  • If paid cash: $19,480 ÷ $240,000 = 8.1%
  • If financed: Higher return (leverage)

Payback period:

  • $240,000 ÷ $19,480 = 12.3 years

Considerations:

  • Appreciation (home value increases)
  • Tax benefits (depreciation, deductions)
  • Mortgage paydown (if financed)
  • Flexibility (housing for family)

Is it worth it?

  • Financially: 8% return is decent
  • But: Long payback period
  • Consider: Non-financial benefits (housing for family, flexibility)
  • Best if: Planning to stay long-term

Non-Rental Uses for ADUs

Housing for Family

Common uses:

  • Aging parents (close but independent)
  • Adult children (boomerang kids)
  • Caregiver
  • Guests

Benefits:

  • Close proximity
  • Independence
  • Privacy
  • Flexibility

Considerations:

  • No rental income
  • Still have expenses
  • Family dynamics

Home Office

Work from home:

  • Separate workspace
  • No commute (even shorter)
  • Professional space for clients
  • Tax deduction (if qualified)

Benefits:

  • Work-life separation
  • Professional space
  • Quiet and private

Considerations:

  • No rental income
  • May need to meet commercial code
  • Zoning restrictions (check)

Short-Term Rental (Airbnb)

Seattle rules:

  • Must be primary residence
  • Max 2 units (primary + ADU)
  • Must register with city
  • Pay lodging tax

Income potential:

  • Higher than long-term rental
  • But: More work, less stable

Considerations:

  • Legal in Seattle (with restrictions)
  • More management required
  • Seasonal demand
  • Neighbor concerns

Studio or Workshop

Creative space:

  • Art studio
  • Music studio
  • Workshop
  • Hobby space

Benefits:

  • Dedicated space
  • Separate from home
  • Pursue passions

Considerations:

  • No income
  • Expensive for hobby
  • May need soundproofing

Summary: Key Takeaways

  • ADUs are secondary dwellings on same lot as primary home (complete with kitchen, bathroom)
  • Types: Detached (DADU), attached (AADU), conversion (basement/garage)
  • Washington state law requires cities to allow ADUs in single-family zones
  • Seattle allows 2 ADUs per lot, no owner occupancy required, no parking required (2019 changes)
  • Rules vary by city (Bellevue more restrictive, Tacoma similar to Seattle)
  • Cost to build: $150K-$400K+ for DADU, $100K-$250K for AADU, $50K-$150K for conversion
  • Financing options: cash, HELOC, cash-out refinance, construction loan
  • When buying home with ADU: verify it's legal (permitted), check condition, assess rental income
  • Rental income: $1,200-$3,500/month depending on size and location
  • ROI: 6-10% cash-on-cash return, 10-15 year payback period
  • Non-rental uses: family housing, home office, short-term rental, studio

Next Steps

If considering building an ADU:

  1. Check your city's rules (size limits, setbacks, design standards)
  2. Assess your lot (size, setbacks, access, utilities)
  3. Determine budget ($150K-$400K+ for DADU)
  4. Explore financing (cash, HELOC, cash-out refi, construction loan)
  5. Get pre-design consultation (architect or city planner)
  6. Decide on use (rental, family, office)
  7. Calculate ROI (if renting)
  8. Hire professionals (architect, contractor)

If buying home with ADU:

  1. Verify it's legal (check permits with city)
  2. Inspect thoroughly (same as main house)
  3. Assess rental income (market rent, expenses)
  4. Check financing (lender will consider rental income)
  5. Calculate value (does price reflect ADU value?)

Related articles:

Additional Resources

Seattle ADU information:

Other cities:

ADU builders (Seattle):

Financing:

  • BECU (local credit union): becu.org
  • Umpqua Bank: umpquabank.com
  • National lenders: Better.com, Rocket Mortgage

Pre-approved plans:

Share this article