New York City has relaunched the “Plus One ADU” program to help address the housing crisis while creating opportunities for homeowners to earn additional income. Under the initiative, eligible homeowners can receive low-interest loans, interest-free loans, and grants to convert unused space in their homes into residential units or to build new small housing units. With financing support of up to nearly $395,000, the program has already generated significant interest.
An ADU, or Accessory Dwelling Unit, is a small residential unit built on the same property as a primary home. These units can include basement apartments, converted attics, garage conversions, or separate backyard cottages. Homeowners may use them for family members or rent them out for extra income.
The program is jointly funded by New York State Homes and Community Renewal and New York City Department of Housing Preservation and Development. The initiative is being administered by Restored Homes Housing Development Fund Corporation, which will provide support throughout the process, including application assistance, design and engineering services, construction oversight, and tenant management guidance.
In addition to financial support, homeowners will also receive technical assistance. This includes coordination with engineers, designers, and contractors, as well as help with construction planning, permit approvals, and financial counseling. Officials say these services are intended to make the process easier for ordinary homeowners.
Several eligibility requirements have been set for applicants. Homeowners must both own and live in the property. Household income may not exceed 165 percent of the Area Median Income, although applicants earning 120 percent or less will receive priority consideration. Existing mortgage payments must be current, and there cannot be unpaid municipal taxes or fines unless they are covered under an active repayment plan.
Detached, semi-detached, and semi-attached one- or two-family homes are eligible to apply, provided the property can legally accommodate an additional unit under current zoning and building regulations. Homes requiring only limited renovations will receive priority. In addition, any building code violations must be resolved before construction is completed.
Special rules apply to basement apartment conversions. Basements must meet minimum ceiling height requirements, and the property cannot be located in areas considered vulnerable to flooding or coastal hazards. Only properties outside FEMA-designated Special Coastal Risk Districts will qualify for this benefit.
In December 2024, the New York City Council approved a major zoning reform package known as City of Yes for Housing Opportunity. For the first time, the reform officially incorporated ADUs into New York City zoning regulations. As a result, many homes previously considered ineligible due to zoning restrictions may now qualify.
The city’s housing department also announced the creation of a “pre-approved plan library,” featuring design templates that have already been approved. Officials hope this will reduce both permit processing time and construction costs.
However, all units developed under the program must comply with New York City zoning, fire safety, and building codes. The units may only be used as permanent housing and cannot be listed on short-term rental platforms such as Airbnb. Compliance reviews will be conducted every two years.
Applications are currently being accepted from interested homeowners. Applicants must first submit an interest survey, after which authorities will evaluate the property’s feasibility. Those deemed eligible will then receive a formal application package. A non-refundable $200 application fee is required during the submission process.
Housing experts believe the program could play an important role in addressing New York’s growing rental crisis and rising housing costs. They say the initiative will not only create additional housing units across the city but also provide middle-class and immigrant families with long-term income opportunities. Experts also suggest that similar programs aimed at maximizing existing residential resources may expand further in the future.
