ROI Realty Partners
Last month Charlotte implemented a new, up to $80,000 in forgivable, interest-free financing to build an ADU (detached or attached). Please Click Here for the City of Charlotte article.
Key Highlights
Up to $80,000 forgivable, interest-free financing. The City of Charlotte is launching the Queen City ADU Program, which offers homeowners up to $80,000 to help build an Accessory Dwelling Unit (ADU).
The loan is forgivable over time, effectively reducing upfront capital requirements for compliant projects.
Eligibility & Scope
Available to owner-occupants and non-occupant property owners within Charlotte city limits.
Only one ADU per lot is allowed; the ADU and the main house must remain under the same ownership.
The ADU must be self-contained: kitchen, bathroom, independent entry.
Size caps: generally up to 50% of the primary residence, with a maximum (for detached units) ~1,000 sf.
For attached/in-home ADUs, more restrictive caps (e.g. 35% or ≤ 800 sf) may apply.
ADU must not be internally connected to the primary dwelling (i.e. no internal door).
The ADU must conform with Charlotte’s zoning, setback, height, accessory structure, and UDO/UDO-Article 17 rules.
Affordability / Rental Restrictions
The unit must be rented to tenants earning no more than 80% of Area Median Income (AMI).
Monthly rent is capped at the published Fair Market Rent (FMR) at 70% AMI levels for a studio.
The forgivable loan is forgiven at $10,000 per year of maintained affordability up to eight years (i.e. full forgiveness over 8 years).
Accelerated forgiveness (up to $15,000/year) is possible if tenants are voucher holders or referred via the city’s housing partners/supportive agencies.
Strategic Implications for Investors
Pros / Opportunities
The forgivable financing significantly lowers the capital barrier, improving the risk/return profile for ADU additions.
Investors can capture additional rental income (albeit at regulated rates) using existing land.
Because no owner-occupancy requirement is imposed, investors may retain flexibility to rent both primary and ADU units (where zoning allows).
Strong alignment with city goals: ADUs are part of Charlotte’s “missing middle” / infill housing strategy (e.g., Charlotte’s 2040 plan supports increasing ADUs). (Charlotte Future 2040)
Challenges / Trade-offs & Risks
Rent is capped and tenant income restricted to ≤ 80% AMI, limiting yield potential compared to market-rate rentals.
Compliance over an 8-year period is required; any failure to maintain affordability may jeopardize forgiveness or require repayment.
Construction cost risk: many estimates suggest typical ADU builds may cost $90,000 – $250,000 depending on site conditions, finishes, utilities, etc. (Axios)
Only one ADU per lot — so you can’t stack multiple units.
Neighborhood or HOA restrictions may still impose barriers (even if the city allows)
Use Charlotte’s MyADU Eligibility Toolto see if a potential address qualifies.
