NYC Plus One ADU Program (2026): Up to $395,000 to Build an ADU — Who Qualifies, the Real Catch, and How to Apply

Is the NYC Plus One ADU Program open right now?

Yes. The NYC Plus One ADU Program reopened on March 18, 2026 — the first new intake since the original pilot survey closed in February 2024 — and HPD is accepting interest submissions through Friday, June 12, 2026, while limited funding lasts. The first step is a free online interest survey; homeowners who appear eligible are then invited to submit a full application with a $200 non-refundable fee.

If you’ve seen pages saying the program is closed, here’s why: it genuinely was, for over two years. The original Plus One pilot opened in November 2023, drew more than 1,300 submissions in roughly two weeks, and closed to new applicants in February 2024. Then two things changed everything. In December 2024, the City Council adopted City of Yes for Housing Opportunity, which defined ADUs in the zoning code for the first time and made far more properties eligible. And on March 18, 2026, the City reopened Plus One alongside a new homeowner toolkit called ADU for You — a guidebook, a budgeting tool, and a library of pre-approved designs.

What the interest survey does — and doesn’t — do

Submitting the interest survey signals you want in and starts the screening process. It is not an acceptance, not a funding commitment, and not permission to build. HPD reviews submissions and conducts an initial site-feasibility review; only homeowners who appear eligible are invited to the formal application. Think of the survey as getting in line, not crossing the finish line.

Why the June 12 deadline actually matters

Funding is explicitly limited, and the program is operating on a fixed interest window that closes June 12, 2026. Given that the first round attracted over 1,300 submissions in about two weeks, demand reliably outruns supply. Treat this as an urgent, finite window — not a standing entitlement you can return to next year.

The HPD survey is free and is not an approval. Running a feasibility check first takes two minutes and can save you the $200 fee on a lot that can’t qualify.

Is the $395,000 a grant, a loan, or a forgivable loan?

It is both a grant and a loan — never a single $395,000 cash gift. Per HPD, eligible homeowners receive up to $175,000 in grant funding from New York State HCR plus a loan of up to $220,000 from the City, for a combined maximum of $395,000. The City loan can be structured as an amortizing (repayable) loan with no regulatory agreement, or as a deferred-forgivable loan that carries a rent restriction on the new ADU.

This is the single most misunderstood fact about the program, and it changes your decision completely. Here is the money, decoded.

The Plus One Money Decoder

Source: HPD Plus One ADU FAQ (Sept. 4, 2025); Plus One ADU Term Sheet.

The fork in the road: repayable vs. deferred-forgivable

Your loan terms are set by underwriting — household income, credit score, debt-to-income ratio, and age all factor in. Per the Term Sheet, the starting interest rate is 5%, reducible in quarter-point steps to as low as 0% to make payments affordable, and the 15-year term can be extended up to 30 years if needed. Monthly payments are sized so the household keeps at least $200 in monthly cash flow after debts. Then you choose:

• Repayable (amortizing) loan — maximum flexibility. You repay the City loan on standard terms, but there is no regulatory agreement and no rent cap on your ADU. You can charge market rent. This is the path for owners who want the money but not the restrictions.
• Deferred-forgivable loan — maximum subsidy, real strings. The loan is forgiven over time, but in exchange the new ADU must be rent-restricted at 100% of AMI with annual increases capped at 2%, under a 15-year regulatory agreement. If underwriting determines you can’t afford even a 0%, 30-year repayable loan, HPD assigns the deferred-forgivable structure.

Plain-English translation: the “freer” the money, the more control you give up over how much rent you can charge. Family members occupying the unit may be exempt from some of those rent provisions — which matters enormously if your goal is housing an aging parent or adult child rather than maximizing rent.

Who qualifies for NYC Plus One ADU funding?

Plus One is for NYC owner-occupants of 1–2 unit homes earning up to 165% of Area Median Income. You must occupy the property as your primary residence, carry valid homeowner’s insurance, be current on your mortgage, and have no outstanding municipal arrears (or be on an active payment plan). HPD’s FAQ states homeowners up to 100% AMI are currently prioritized, while the program page references preference at or below 120% AMI — verify the live threshold before applying. Submitting interest does not guarantee selection.

There are four gates. Miss any one and you’re likely out — so check all four before you invest time.

The income gate, in real dollars

Here are the NYC AMI thresholds from HPD’s official chart (currently published as 2025 figures, verified live on May 26, 2026) at the levels that matter for Plus One — the 100% and 120% priority references and the 165% ceiling.

Source: NYC HPD Area Median Income chart (2025 figures, verified May 26, 2026). Note: rental income from the new ADU is counted toward your household income. HUD updates regional AMI annually; re-check the HPD chart when you apply.

The priority caveat, resolved. Plan around the 100% AMI figures if you want to be in the strongest position today, treat 120% as the program’s stated preference ceiling, and know that 165% is the hard eligibility cap. Before you apply, confirm the current threshold on HPD’s latest materials or by emailing PlusOneADU@hpd.nyc.gov.

The other three gates

• Owner-occupant. You must live in the home as your primary residence. The City enforces this with annual affidavits if you receive financing.
• Mortgage and municipal standing. Current on your mortgage; no outstanding arrears with the Department of Finance or DEP, or enrolled in an active payment plan. Valid homeowner’s insurance required.
• Eligible property (covered in full in the next section).

Two useful nuances from the FAQ: you can apply even if the space you intend to convert is currently occupied, and you can apply even if you have an existing illegal basement unit (that routes through the Basement Legalization Program — more below). What you cannot do is get reimbursed for an ADU you already finished building yourself.

What properties and ADU types can use Plus One?

Eligible Plus One properties are existing 1–2 unit homes — semi-attached, semi-detached, or fully detached — in a zoning district that allows up to three residential units, outside FEMA’s Special Coastal Risk District. HPD recognizes five ADU types: attached structures, detached existing structures (like a garage), newly built detached structures, basement conversions, and attic conversions. Basement ADUs carry significant extra flood and ceiling-height requirements.

One source conflict worth knowing. HPD’s live program page and FAQ describe eligible homes as 1–2 unit detached, semi-detached, or semi-attached. The older Plus One term sheet still uses narrower “one-unit, single-family detached” language. If you own a two-family or semi-attached home, treat the broader HPD/FAQ rule as current — but confirm your specific property with HPD before relying on funding.

ADU type matrix

The size, height, and placement rules, decoded

• Maximum size: 800 square feet of zoning floor area. There’s no minimum, but the unit still has to meet Housing Maintenance Code room-size rules. For a detached backyard ADU, the structure also can’t cover more than one-third of your required rear yard (NYC Zoning Resolution §23-341). In practice, most NYC backyards hit the rear-yard limit long before the 800-square-foot limit.
• Height: one story / 15 feet — unless you put a parking space below part of the ADU, in which case two stories / 25 feet is allowed. Height is measured from Base Flood Elevation.
• Setback: at least 5 feet from the lot line for a new detached ADU.
• Separate entrance required, and the owner must reside on the zoning lot at the ADU’s initial occupancy.
• No front-yard ADUs. Period.

Where backyard (detached) ADUs are NOT allowed

Per the NYC DOB ADU page (last revised 09/30/25), backyard ADUs are not permitted in:

• Historic Districts (unless converting an existing structure)
• R1-2A, R2A, and R3A districts outside the Greater Transit Zone
• The Special Bay Ridge District, west of Ridge Boulevard or south of Marine Avenue

Important exception: converting an existing garage to an ADU is not classified as a “Backyard ADU” under Zoning §12-10, so garage conversions are not blocked in those restricted districts. If a backyard cottage is off the table for your lot, an existing-garage conversion may still be on it.

Basement and cellar conversions: the extra hurdles

New subgrade ADUs face the strictest conditions and are not permitted in high-risk flood areas. Per DOB, subgrade ADUs are prohibited in areas demarcated by FEMA’s Special Flood Hazard Area, the Coastal Flood Risk Area, and DEP’s 10-Year Rainfall Flood Risk Area. HPD’s program materials add ceiling-height (7-foot minimum) and no-recent-flooding requirements. Because HPD’s live page and FAQ use slightly different coastal-year labels for these layers, check your address against the current official flood-risk maps before filing.

The Multiple Dwelling Law trap (this one is expensive)

For a two-family home, adding a basement, cellar, attic, or attached ADU can legally turn the building into a three-family dwelling subject to the New York State Multiple Dwelling Law (MDL) — which can require sprinklers, egress upgrades, and other potentially cost-prohibitive work. Per the FAQ, MDL is not triggered if the ADU is: (1) fully detached from the main structure, (2) attached but separated by a fire-rated wall, or (3) a basement unit legalized through the Basement Legalization Program. If you own a two-family and want an interior ADU, ask about MDL before you pay for design — it’s the difference between a feasible project and a financial wall.

Can my NYC lot legally support an ADU? (The kill-switch checklist)

Under City of Yes, NYC generally allows one ADU per 1–2 family lot, capped at 800 square feet, with the owner residing on the lot at initial occupancy. But zoning district, flood maps, historic-district status, the Special Bay Ridge District, and the Multiple Dwelling Law can each independently block or shrink a project — so legal eligibility must be confirmed lot by lot, not assumed from the citywide rule.

Run down this list. Any single “yes” in the blocker column is a reason to stop and verify before spending money.

A sobering data point: an analysis by the Regional Plan Association found that only about 68,000 of roughly 565,400 NYC 1–2 family homes (around 12%) would be eligible to build or legalize an ADU under current restrictions. We mention it not to discourage you, but so you check your specific lot rather than assuming the citywide “yes” applies to you. (Source: Regional Plan Association.)

Will Plus One funding cover the cost of a NYC ADU?

Sometimes, but never assume it. The City’s official pre-approved plan estimates range from $85,000–$100,000 for the smallest detached studio to $550,000–$650,000 for the largest — and every estimate excludes site connections and site-specific costs. The $395,000 program maximum is a ceiling, not a promise.

This is the section that prevents the most expensive mistake homeowners make: budgeting off a sticker price that was never meant to be all-in.

Our verified Plus One Funding Gap table

We opened the official ADU for You Pre-Approved Plan Library and recorded each plan’s published construction-cost range, then calculated the midpoint and midpoint cost per square foot, and compared each to the $395,000 maximum. These are construction estimates only — they exclude site connections (water, sewer, gas, electric laterals) and site-specific costs like excavation, foundation, drainage, and flood-resistant work. We verified the low and high endpoints directly on the plan pages.

Source: NYC ADU for You Pre-Approved Plan Library, plan pages, verified May 26, 2026. Plan costs exclude site connections and site-specific costs and are not bids or guarantees; the library expands as DOB approves more designs.

What the numbers tell you: across these verified plans, the median midpoint is about $245,000 and the average midpoint is roughly $267,000. Eight of the eleven plans carry a published high-end estimate at or below $395,000 before site costs; three exceed it. Translation: many efficient detached cottages and conversions fit comfortably inside the program ceiling on construction alone — but the plan price is a starting point, not an all-in bid.

Why “under $395,000” is not the same as “fully covered”

The plan estimate may exclude utility laterals, grading and drainage, excavation, foundation surprises, flood-resistant elevation, and main-house electrical upgrades. For many smaller PAPL designs, the published estimate leaves real room under $395,000 before site work. For larger or complex builds — anything needing serious site work, flood elevation, or MDL upgrades — expect a funding gap you ’ll need to cover with savings, a HELOC, or a construction loan. The program is generous; it is not bottomless.

Affiliate disclosure (repeated near financing content): The Dwelling Index is reader-supported. When you use our links to explore financing options, we may earn a commission at no extra cost to you. Our recommendations are based on independent research and are never influenced by compensation. We present financing as educational lanes; we do not rank lenders by compensation, and nothing here is a quote, an offer, or a guarantee of any rate, payment, or approval.

What strings come with the money?

Selected homeowners take on real, multi-year obligations: a primary-residency requirement of at least 270 days per year, an ownership/occupancy commitment of 10 years (or 15 years under a regulatory agreement), a prohibition on renting out both units, mandatory landlord training, and — on the deferred-forgivable loan — a 15-year rent restriction. Selling to a non-eligible buyer or doing a cash-out refinance during the loan term triggers repayment.

Read this carefully, because these strings are exactly why Plus One is perfect for some owners and wrong for others.

A few of these deserve emphasis:

• You cannot use your own contractor or architect. Per the FAQ, Restored Homes HDFC provides the list of program-approved architects and general contractors. This is non-negotiable inside Plus One.
• A cash-out refinance triggers repayment. If part of your long game was to pull equity out of the house in a few years, Plus One conflicts with that.
• Family occupancy can soften the rent rules. If you’re housing a parent or adult child rather than a market tenant, family members occupying the unit may be exempt from certain rent provisions.

Here’s the hope, because there genuinely is some. If those strings stop you, you are not stuck — you’ve simply learned that the repayable loan path (no regulatory agreement, no rent cap) or building privately is your better road. For the owner who wants to create stable long-term housing, keep their home, and bring in steady income, these “strings” are mostly just the shape of a public program doing what it’s designed to do: up to $175,000 you never repay, plus a loan that can drop to 0% interest.

How do I apply without wasting the $200 fee?

Start with the free online interest survey on HPD’s Plus One ADU page — never with the paid application. HPD conducts an initial site-feasibility review; only homeowners who appear eligible are invited to submit the full application, which includes the $200 non-refundable fee. Submit early: HPD reviews on a rolling basis, funding is limited, and the interest window closes June 12, 2026.

The order of operations is the whole game here. The $200 fee comes after the free screen — so the smart move is to make sure your property can plausibly qualify before you ever reach a paid step.

The 10-step Plus One sequence

Per the FAQ, selected participants should expect this multi-year path. Completing these steps does not guarantee funding or approval.

1. 1

   Online interest survey (free)

   You submit basic info about you and the property on HPD’s Plus One ADU page

2. 2

   Program application + $200 fee

   Only if invited after HPD’s initial feasibility review. Non-refundable.

3. 3

   Financial review

   Income, debt, mortgage, obligations reviewed to determine loan structure

4. 4

   Home inspection

   If the property fails due to unforeseen barriers, you cannot proceed

5. 5

   Program approval letter + Developer Agreement

   Formal terms begin here

6. 6

   Pre-development: design

   Using program-approved architects (from Restored Homes’ list)

7. 7

   Pre-development: contractor bidding

   Program-approved general contractors only

8. 8

   Pre-development: loan processing & closing

   Loan documents prepared and signed

9. 9

   Construction

   Restored Homes provides pre- and post-construction support including a one-year warranty

10. 10

    Tenant approval & monitoring

    Ongoing annual residency certifications and rent compliance

You’ll also complete a homeownership training class during the process, and Restored Homes provides a one-year post-construction warranty.

Documents to have ready (so you’re not scrambling)

• The $200 non-refundable fee
• Completed Plus One ADU application form + Right of Entry form
• Proof of primary residence and a homeowner occupancy affidavit
• Proof of valid homeowner’s insurance
• Proof of income: four consecutive paystubs, a W-2, and income tax returns for the last two years (plus documentation of any supplemental, self-employment, or unemployment income)
• Absent Deed Holder form / death certificate for a deceased deed-holder, if applicable
• Designated Communication form

How do NYC ADU permits work after City of Yes?

ADU applications under Local Law 127 of 2024 are filed in DOB NOW: Build, which went live for ADU filings on September 30, 2025. You (or your licensed professional) create an Alt-CO-GC or New Building-GC job, and a registered design professional handles the plans. Choosing a pre-approved design from the City’s library simplifies approval because DOB has already reviewed the design generically for code compliance.

• Filing path: Alt-CO-GC (alteration with a new or amended Certificate of Occupancy) or New Building-GC, submitted in DOB NOW: Build. The application asks whether the scope includes an ADU and, if so, the pre-approved plan number, ADU location, and where the main entrance opens.
• Who files: a Registered Design Professional (RDP) — a licensed architect or professional engineer. Even homeowners who don’t use Plus One can hire an RDP to file plans and pull permits, building as-of-right if the project complies.
• Occupancy classification: the ADU is recorded under Residential Occupancy Group R-2 or R-3 on the Schedule of Occupancy.
• Pre-approved plans: launched with nine DOB-reviewed detached-cottage designs in March 2026 and expanding; choosing one connects you with the RDP who created it for site-specific approval.

What building-code issues can make a NYC ADU fail?

Beyond zoning, several NYC Building Code requirements can make an ADU infeasible or far more expensive: sprinkler triggers (especially via the Multiple Dwelling Law), emergency escape and rescue openings, a separate entrance, shared utilities with separate shutoffs, minimum habitable-room ceiling heights, radon and vapor testing for basement/cellar units, Fire Department access paths, and building-separation requirements. These are governed by Building Code Appendix U and 1 RCNY §105-08.

Zoning tells you whether you can build; the Building Code often decides what it costs. The items that most often derail a project:

• Sprinklers. Triggered most commonly when a two-family conversion falls under the MDL. Retrofitting sprinklers can be one of the single most expensive line items.
• Egress and emergency escape/rescue openings. Every habitable ADU needs compliant means of egress; basements and attics are where this gets hard.
• Separate entrance and Fire Department access. ADUs require their own entrance and an accessible path.
• Utilities. Shared utilities are allowed but generally need separate shutoffs/controls for the ADU.
• Basement/cellar specifics. Minimum ceiling height (7 ft), plus radon and vapor certification for subgrade units.
• One-family vs. two-family basement nuance. A basement/cellar ADU may be possible in an existing one-family home under Building Code Appendix U, or in a new one-family home under 1 RCNY §105-08 — but in a two-family home, a basement/cellar ADU can trigger R-2 classification and the MDL. (Source: NYC DOB ADU FAQ.)

The practical takeaway: have your RDP flag sprinkler and MDL exposure before you commit to a design. It’s the cheapest insurance you’ll buy on the whole project.

Should I use a pre-approved plan or a custom ADU design?

A pre-approved plan from the City’s library speeds up permitting because DOB has already reviewed it generically for code compliance, but it is not an automatic approval — you still need a registered design professional and site-specific review. A custom design makes sense for odd lots, basements, tight access, or family-specific layouts, but carries more design uncertainty and potentially higher cost.

A “pre-approved” plan saves time on the front end of permitting, but it never removes the need to prove it works on your specific lot. Treat it as a head start, not a finish line.

What if I don’t qualify, funding runs out, or I miss the deadline?

Not qualifying for Plus One does not mean you can’t build an ADU. Per HPD’s own FAQ, any homeowner can move forward independently by hiring a licensed professional engineer or registered design professional to file plans and pull permits with DOB — as long as the project complies with City of Yes zoning and the Building Code. ADUs are now allowed as-of-right on most qualifying 1–2 family lots, which means no variance and no community-board hearing.

Can I legalize an existing illegal basement apartment?

Possibly — through a separate, narrow path, but not right now. Local Law 126 of 2024 created a basement/cellar legalization pathway (run by DOB) for currently illegal but occupied units that existed before April 20, 2024. The statutory deadline to enter is April 20, 2029 — but DOB is not currently accepting legalization or new cellar ADU applications until the Housing Maintenance Code amendment and DOB rules are promulgated and DOB NOW functionality is available.

This is a real opportunity for a specific group of owners, with two hard limits to understand. First, it isn’t open yet — DOB’s ADU page (last revised 09/30/25) states legalization and new cellar ADU applications “are not currently being accepted” pending rulemaking. Second, it has geographic limits. Eligibility is restricted to specific Community Districts:

The unit must also sit outside the coastal flood zone and the 10-year rainfall flood-risk area. Required upgrades (once the program opens) include hardwired smoke/CO detectors, water sensors and alarms, automatic sprinklers, a compliant stairwell and at least one means of egress, a 7-foot minimum ceiling height, vapor/radon certification, and an amended legal Certificate of Occupancy — with all code upgrades completed within 10 years. One upside: basement units legalized through this program are exempt from MDL triggers. Homeowners in this program may also be eligible for Plus One financing. If your property isn’t in one of the listed Community Districts, this specific path isn’t open to you.

What mistakes make NYC ADU projects more expensive?

The costliest mistake is treating the $395,000 maximum as guaranteed, all-in money before verifying property eligibility. In NYC, flood maps, the Multiple Dwelling Law, basement ceiling and flood rules, utility connections, open violations, lot access, and site work routinely affect the budget as much as the published ADU plan price.

How will an ADU affect my property taxes?

Adding an ADU will increase your property’s assessed value and therefore your property taxes over time, but Plus One participants benefit from a partial tax exemption during the first ten years after construction is completed. Owners may also apply separately for homeowner property-tax exemptions and benefits through the NYC Department of Finance.

The increase phases in rather than hitting all at once, thanks to the ten-year partial exemption. As with everything tax-related, your actual outcome depends on your assessment and your specific exemptions, so confirm the details with the NYC Department of Finance for your property. (Source: HPD Plus One ADU FAQ; NYC Department of Finance.)

Is the Plus One ADU program legitimate? Who runs it?

Yes, it’s a legitimate government program. Plus One is administered by NYC Housing Preservation and Development (HPD) in partnership with Restored Homes HDFC, with grant funding from New York State Homes and Community Renewal (HCR). It’s part of New York State’s $85 million statewide Plus One ADU initiative, which HCR reports now spans 14 partners working to create more than 550 ADUs statewide, including 37 projects in New York City.

If your first instinct on hearing “the city will give you $395,000” was this sounds too good to be true — that’s healthy skepticism, and the answer is reassuring. The money flows through established government agencies and a long-standing nonprofit administrator, and it sits inside a multi-year, multi-partner state program with public reporting. The catch isn’t legitimacy; it’s the eligibility gates and strings we’ve detailed above. (Source: NYC HPD/DOB press release 017-26; NYS HCR.)

Frequently asked questions

Methodology

Dwelling Index is an independent research resource covering ADU financing, costs, and regulations. We built this guide directly from primary government sources: the NYC HPD Plus One ADU program page, the HPD/DOB press release dated March 18, 2026, the Plus One ADU FAQ (last updated September 4, 2025), the Plus One ADU Term Sheet, HPD’s Area Median Income chart, the NYC Department of Buildings ADU page and FAQ, the ADU for You Pre-Approved Plan Library, and City of Yes for Housing Opportunity materials from the NYC Department of City Planning. We used homeowner forums and community discussions only to understand the questions and worries real New Yorkers have — never as a source for laws, costs, eligibility, or financing terms.

For the funding-gap table, we opened the official pre-approved plan pages, recorded each published cost range and square footage, calculated the midpoint and midpoint cost per square foot, and compared each to the published $395,000 maximum. We verified the lowest and highest plan costs directly on their plan pages. Published plan costs are construction estimates that exclude site connections and site-specific work; they are not all-in bids or guarantees. Where official sources differed — the AMI priority band and the labeling of certain flood layers — we presented both and pointed you to the live source to confirm. This page is educational and is not legal, tax, financial, or construction advice.

Last updated: May 26, 2026. Last verified: May 26, 2026.

Sources

• NYC HPD — Plus One Ancillary Dwelling Unit (ADU) Program (program page; eligibility; application status)
• NYC HPD / DOB — Press release 017-26 (March 18, 2026): reopening, $395K, June 12 deadline, nine launch designs
• NYC HPD — Plus One ADU FAQ (last updated September 4, 2025): income/priority, property rules, basement & MDL rules, loan terms, strings, application steps, documents
• NYC HPD — Plus One ADU Term Sheet: loan structure, interest mechanics, residency, rent restriction
• NYC HPD — Area Median Income chart (current published figures)
• NYC Department of Buildings — Ancillary Dwelling Units page (last revised 09/30/25) and ADU FAQ: DOB NOW filing, Special Bay Ridge, subgrade flood areas, Appendix U, legalization status
• NYC ADU for You — Pre-Approved Plan Library and plan pages (verified May 26, 2026)
• NYC Department of City Planning — City of Yes for Housing Opportunity (adopted December 5, 2024)
• New York State Homes and Community Renewal — statewide Plus One ADU initiative
• Regional Plan Association — analysis of NYC lots eligible for ADUs