An Accessory Dwelling Unit might be the smartest decision you make when building your new home. From generating rental income that covers most of your mortgage to creating a private space for family, here is everything Utah homeowners need to know about ADUs — and why building one from the start saves you thousands.
What Is an ADU?
An Accessory Dwelling Unit (ADU) is a self-contained living space built within or attached to a single-family home. It has its own entrance, kitchen, bathroom, and living area — everything needed for independent living.
In Utah, the most common type of ADU is a legal basement apartment. Unlike a casual basement bedroom, a legal ADU is fully permitted with proper egress windows, fire-rated separation, a separate entrance, and a complete kitchen. It can be legally rented out, and it adds real, appraised value to your home.
Think of it this way: you are building one home, but you get two income-producing living spaces.
Good News: Utah Makes It Easy
If you have ever wondered whether building an ADU is complicated or requires jumping through hoops, here is the short answer: it is not, and it does not.
Utah is one of the most ADU-friendly states in the country. Since HB 82 passed in 2021 (opens in new tab), basement apartments are a permitted use in residential zones statewide, which means there is no lengthy approval process or special hearings required. Here is what that means for you as a homeowner:
- Your HOA cannot stop you. If your ADU is inside your home's footprint (like a basement apartment), your homeowners association has no authority to block it (opens in new tab).
- You save on fees. Internal ADUs are exempt from municipal impact fees (opens in new tab) under Utah Code 11-36a-202, which means more of your budget goes toward the actual build.
- The rules are simple. You live in either the main home or the ADU, and you rent to long-term tenants (30 days or more). That is it.
The takeaway: Building an ADU in Utah is straightforward. The permitting is simple, the rules are clear, and UpDwell handles the process for you as part of your new home build.
The Financial Case: Your Basement Could Pay Over Half Your Mortgage
Here is where ADUs get exciting. Let's look at real numbers for a typical Utah new-construction home.
What an ADU rents for in Utah (based on current Utah rental market data (opens in new tab) and local ADU income estimates (opens in new tab)):
- Lehi: $1,700–$2,100/month
- Draper: $1,800–$2,200/month
- Sandy: $1,600–$2,000/month
- Herriman: $1,600–$2,100/month
- Utah average: $1,600–$2,200/month
The mortgage math:
Say you are building a home priced at $550,000. Adding a finished ADU basement typically costs $85,000–$120,000 on top of that, bringing your total build to around $650,000. With 20% down and a 6.5% interest rate on a 30-year mortgage, your monthly payment (principal + interest) on the full $650,000 build is roughly $4,108.
Without the ADU, your payment on the $550,000 home alone would be about $3,476. The ADU adds roughly $632/month to your mortgage — but it brings in $1,900/month in rental income. That is a net gain of over $1,200 every month, even after accounting for the higher mortgage.
Put another way: the ADU rental income covers 46% of your total mortgage on the larger loan, and more than pays for its own cost from day one. In higher-demand areas like Draper where rents reach $2,200, you are looking at 54% coverage of your full mortgage.
| Without ADU | With ADU | Difference | |
|---|---|---|---|
| Home Cost | $550,000 | $650,000 | +$100,000 |
| Monthly Mortgage | $3,476 | $4,108 | +$632/mo |
| ADU Rental Income | — | $1,900/mo | +$1,900/mo |
| Net Monthly Cost | $3,476 | $2,208 | -$1,268/mo |
Over 10 years, that $1,900 per month in rental income adds up to $228,000 — more than double the cost of the ADU itself. And here is a detail that many first-time builders don't know: Fannie Mae now allows projected ADU rental income to count toward your mortgage qualification (opens in new tab). That means the ADU can actually help you qualify for the larger loan in the first place.
Boost Your Home's Value
The financial benefits don't stop at rental income. An ADU significantly increases the appraised value of your property.
- Homes with ADUs are priced 35% higher on average (opens in new tab) than comparable homes without one.
- Industry estimates place the typical value increase at 20–35% (opens in new tab) of the home's overall value.
- The Federal Housing Finance Agency (FHFA) (opens in new tab) found that properties with ADUs had a median appraised value of $1,064,000 compared to $715,000 for properties without — and saw annualized appraisal growth of 9.34% from 2013 to 2023.
For a $400,000 Utah home, that means an ADU could add $80,000–$140,000 in property value — often more than the cost to build it.
A Home for Family
Not every ADU is about rental income. For many Utah families, an ADU is about keeping family close while giving everyone their own space.
The numbers tell the story: 17% of all home purchases in 2024 were multigenerational (opens in new tab) — an all-time record, according to the National Association of Realtors. Over 59 million Americans (opens in new tab) now live in multigenerational households, per the Pew Research Center. And the top reason? Cost savings, cited by 36% of multigenerational buyers.
But here is what stands out: only 30% of multigenerational households actually have separate living areas (opens in new tab). That means the vast majority are sharing kitchens, bathrooms, and common spaces — not by choice, but because their homes weren't designed for it.
An ADU changes that equation entirely:
- Aging parents get their own kitchen, bathroom, and living space — with family just upstairs. No nursing home costs, no loss of independence.
- Adult children saving for their own home get affordable housing without feeling like they are back in their childhood bedroom.
- Returning college graduates have a landing pad with real privacy while they establish their careers.
Utah's family-centered culture makes this especially relevant. With the youngest median age and largest average household size (opens in new tab) in the nation, Utah families are already living multigenerationally at higher rates than most states. An ADU just makes it work better for everyone.
Why Build Your ADU with Your New Home
You might wonder: can't I just finish the basement later? Technically, yes. But building your ADU as part of new construction is dramatically better in almost every way.
1. Shared infrastructure saves thousands. When the ADU is designed into the original plans, the foundation, framing, plumbing, electrical, and HVAC are all installed as one coordinated system. Retrofitting means tearing into finished walls, re-routing plumbing, and adding electrical capacity after the fact.
2. Code compliance from day one. A purpose-built ADU has proper fire-rated separation, egress windows, ceiling heights, ventilation, and a separate entrance engineered into the design. Retrofitting often means discovering that your existing layout doesn't easily accommodate code requirements.
3. No hidden surprises. Retrofit projects regularly uncover issues — outdated wiring, inadequate insulation, structural limitations, or plumbing that needs to be completely re-routed. These "surprises" can add $10,000–$50,000 (opens in new tab) to the project cost. With new construction, there are no surprises.
4. Higher rental rates. A brand-new, purpose-built ADU with modern finishes, proper ceiling heights, abundant natural light, and quality sound separation commands significantly higher rent than a converted basement with low ceilings and small windows.
5. One permit, one timeline. The ADU is included in your original building permit. No separate application, no additional inspections months down the road, no construction disrupting your daily life after you have already moved in.
6. Energy efficiency built in. UpDwell homes are built with our GreenLean building system, featuring advanced insulation, high-efficiency HVAC, Low-E windows, and a sealed building envelope. Your ADU benefits from the same energy-efficient construction — which means lower utility costs for your tenant and a more attractive rental listing.
UpDwell Homes That Are ADU-Ready
We have designed several of our most popular floor plans with ADU-ready basements. These homes include the infrastructure, layout, and design flexibility to support a fully legal basement apartment from day one.
1-UP Series (Single-Story Ramblers):
- The Ashton — 3 bed / 2 bath, starting at $388,000
- The Brighton — 3 bed / 2 bath, starting at $395,000
- The Concord — 3 bed / 2 bath, starting at $399,000
- The Easton — 4 bed / 2.5 bath, starting at $392,000
- The Newport — 3 bed / 2 bath, starting at $398,000
- The Chandler — 3 bed / 2 bath, starting at $405,000
2-UP Series (Two-Story Homes):
- The Aspen — 3 bed / 2 bath, starting at $425,000
Each of these designs includes dedicated ADU basement floor plans showing the separate entrance, kitchen, living area, bedroom, and bathroom layout. Ask our team for the full ADU floor plan package when you schedule your consultation.
Getting Started
Building an ADU-ready home with UpDwell is straightforward. Here is how to take the next step:
- Browse our ADU-ready floor plans — Explore the home designs listed above and find the layout that fits your family.
- Schedule a consultation — Talk with our team about your goals, whether that is rental income, family housing, or both.
- Review the ADU floor plans — We will walk you through the dedicated basement ADU layouts for your chosen home design.
- Choose your community — Select from our available communities across Utah.
- Start building — Your ADU is built as part of your new home, on one timeline, with one permit, and no surprises.
Whether you are looking to offset your mortgage, create a home for family, or simply build the most financially smart home possible, an ADU is one of the best investments you can make in Utah's housing market.
Ready to learn more? Schedule a free consultation with our team today.
Sources
- Utah Property Rights Office — ADU Laws (opens in new tab)
- Steadily — ADU Laws and Regulations in Utah (opens in new tab)
- Apartments.com — Average Rent in Utah (opens in new tab)
- ProWorx Construction — Utah Basement Apartment ROI Guide (opens in new tab)
- National Mortgage Professional — Fannie Mae ADU Income Policy (opens in new tab)
- RenoFi — How an ADU Increases Property Value (opens in new tab)
- Abodu — Do ADUs Increase Property Values? (opens in new tab)
- Better Place Design & Build — ADU ROI in 2026 (opens in new tab)
- National Association of Realtors — Multigenerational Living Data (opens in new tab)
- Pew Research Center — Multigenerational Households (opens in new tab)
- Lombardo Homes — Multigenerational Living Statistics (opens in new tab)
- Deseret News — Utah Median Income and Household Size (opens in new tab)
- Gather ADU — Renovation vs. New Construction (opens in new tab)
Key Takeaway
Whether you're building your first home or upgrading to a forever home, choosing a builder with a proven track record of quality, transparency, and energy efficiency makes all the difference. UpDwell Homes has helped hundreds of Utah families find their perfect home — and we'd love to help you too.
