What Are ADUs?

Technically speaking, the “Accessory Dwelling Unit” (ADU) has existed since the 1980s — but the concept is much older. If the term doesn’t sound familiar, you might know it by another name: granny flat, in-law suite, carriage house, or backyard cottage.

An ADU is a self-contained living space on the same lot as a single-family home. It might be a separate building in the backyard, a converted garage, or an addition to the main house. These dwellings typically include a private entrance, kitchen, and bathroom — making them ideal for extended family, aging parents, renters, or adult children.

And while they go by many names, ADUs are quickly gaining renewed attention as a creative, sustainable housing solution for homeowners, renters, and communities alike.

A New Wave of Purpose-Driven Backyard Homes

Joe Gebbia, co-founder of Airbnb, recently launched a startup called Samara focused on prefab backyard houses. These energy-efficient units (available as 430-square-foot studios or 550-square-foot one-bedrooms) come equipped with solar panels and electric appliances — and Samara handles the entire process from permitting to construction.

Samara’s mission highlights the potential of ADUs to expand housing access while reducing environmental impact. But even beyond sustainability, ADUs offer wide-ranging social and economic benefits that are driving their popularity across the U.S.

Why ADUs Are Gaining Momentum

One major reason: affordable housing is disappearing. Between restrictive zoning, high construction costs, and rising home prices, many communities face a growing shortage of small, attainable homes.

Zoning laws currently prohibit multi-unit housing in about 75% of residential neighborhoods, making it nearly impossible to build duplexes, triplexes, or other lower-cost alternatives. ADUs offer a way to work within existing zoning to add housing — without changing neighborhood character.

For many homeowners, an ADU offers:

• A way to support aging family members

• Rental income to offset a mortgage

• A semi-private space for adult children or guests

• More flexibility and financial stability over time

Who Benefits from ADUs?

Millennials and Young Adults

As housing prices outpace wages, millennials and Gen Z adults increasingly live at home longer — not out of preference, but necessity. ADUs provide privacy and independence without the cost of a full rental or mortgage.

They also allow families to pool resources while maintaining personal space, and homeowners can even rent out their ADU to generate extra income.

Seniors and Multigenerational Households

On the other end of the spectrum, older adults face a housing affordability crisis of their own. Many want to downsize or age in place — but face limited inventory, high costs, and homes that aren’t designed for aging.

An ADU can help in two ways:

• It can be a downsized residence on a family property, allowing seniors to age in place near loved ones

• Or it can house younger family members, allowing seniors to remain in their main home while getting help with finances, chores, and social support

Multigenerational living in this form can reduce isolation, lower household expenses, and allow for convenient childcare and eldercare within the same property.

ADUs and the Bigger Picture

The benefits of ADUs go beyond individual households. As rental prices soar and housing supply shrinks, cities and states are starting to see ADUs as part of the solution.

Take Los Angeles, for example: the city recently introduced a pre-approved Accessory Dwelling Unit Standard Plan to help reduce costs and speed up the permitting process. This program can save homeowners up to $30,000 and cut several months off their project timeline — all in the name of expanding the city’s housing stock.

Other regions are following suit. But even with supportive policies, cost remains a barrier for many homeowners.

How to Pay for an ADU: Exploring Your Home Equity

Building an ADU can be expensive. From construction and permits to design and materials, costs often run into the six figures — which can be hard to cover without taking on new debt.

That’s where Unison comes in.

Unison helps homeowners leverage their home equity to fund big goals — like building an ADU, remodeling a home, paying off debt, or preparing for retirement. Two options in particular may be helpful:

Equity Sharing Agreement (ESA)

Unlock a significant portion of your home’s value without monthly payments or interest. Instead of paying back a loan, you share a portion of your home’s future change in value when you sell or settle the agreement.

This can be a powerful way to finance an ADU project without tightening your monthly budget, especially if you’re retired or living on fixed income.

Equity Sharing Home Loan (ESHL)

Prefer a loan structure with predictable payments — but want to avoid high interest rates? The ESHL is a modern alternative to a traditional second mortgage, offering much lower monthly payments in exchange for a share in your home’s future appreciation.

This option may be well suited for homeowners who plan to stay in their home long-term and want flexibility without overextending themselves financially.

A Flexible Future — Built in Your Backyard

Whether you're planning for retirement, building a home for your aging parents, or looking to generate passive income, an ADU could be a smart solution for today and tomorrow.

And with the right funding strategy — like tapping your home equity through Unison — you can make that backyard dream a reality without taking on the burden of traditional debt.

Ready to see how much equity you could access? Start here to get an estimate, with zero commitment and zero impact to your credit.

Disclaimer: This content is provided for general informational and educational purposes only and is not intended to serve as financial, investment, legal, tax, or lending advice. The information presented may not apply to your specific situation, and actual outcomes can vary based on individual circumstances, market conditions, and applicable laws. Home equity sharing agreements and loans involve risks, including the potential loss of future home appreciation or other financial implications. Terms, availability, and eligibility for any products mentioned may differ by state, lender, or other factors. We strongly recommend consulting with a qualified financial advisor, attorney, or licensed professional before making any decisions or entering into agreements. Unison Mortgage Corp. is a licensed lender (NMLS ID 2574289); this article may include promotional content related to its services.