These 5 states will pay you to build a tiny home in your backyard

As the demand for affordable housing surges, several states are stepping in to support homeowners seeking to build tiny homes, known as accessory dwelling units (ADUs), in their backyards. These states provide grant money to ease the often prohibitive costs associated with constructing ADUs. Here's a breakdown of the programs, eligibility criteria, and funding available in these states.

In Colorado, the Colorado Department of Local Affairs (DOLA) teams up with local governments to implement changes in regulations, ensuring compliance with HB24-1152, an act passed in 2024 to encourage ADU construction. The Accessory Dwelling Unit Grant Program (ADUG), funded with $5 million, assists jurisdictions in bringing their codes into line with the new law.

The Colorado Housing and Finance Authority (CHFA) is also creating programs directly supporting homeowners. Applications for the third round of funding opened on September 28 and closed on October 23, 2026.

Hawaii's Maui County has launched the ʻOhana Assistance program to help homeowners build attached or detached ADUs. The County of Kaua'i offers financial assistance for homeowners who construct a second unit on their property through the Affordable Additional Rental Unit (ARU) program. Owner-occupants with property zoned for residential use can apply for both programs.

The ʻOhana Assistance Pilot Project provides grants up to $100,000, while Kaua'i's ARU program waives certain fees and subsidizes nearly $20,000 for certified ARU homeowners.

In Massachusetts, homeowners in most areas of the state, excluding Boston, can build ADUs up to 900 square feet. The Affordable Homes Act supports ADU construction, and the state has launched a statewide incentive program. Eligible homeowners can apply for grants under this program, focusing on building ADUs that meet workforce housing requirements and are rented to full-time residents for at least five years.