How to add a mother-in-law apartment

Can you pay for it?

Before building an in-law suite or buying a house that includes an auxiliary dwelling, you first should check if you can get standard financing — namely, loans backed by Fannie Mae and Freddie Mac — says Scott Thigpen, manager of the mortgage-loan department at Citizens Bank in Sumter, S.C.

If you can't, a portfolio loan may be an alternative, Thigpen says. These loans are held by the banks but not sold to Fannie or Freddie, and the guidelines for them can be far more flexible than for traditional mortgages. For some, lenders may have no minimum credit-score requirement. But the bank typically will charge a higher interest rate for these loans to justify what may be higher risks.

If you sell or refinance a home with this kind of addition, you'll also face major appraisal scrutiny. If auxiliary residences are not common in your neighborhood, a mortgage lender may view your in-law suite as a negative. Unless an appraiser can find three similar homes near your house that have sold within the past 12 months, an underwriter likely will view the extra rooms or detached structure as less attractive to buyers and tougher to sell, Thigpen says.

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Is your area zoned for this?

Zoning laws vary, but most municipalities have some restrictions on the size or acceptability of auxiliary dwellings, Thigpen says. Older neighborhoods tend to have fewer restrictions, while newer, single-family subdivisions may have covenant stipulations or deed restrictions that ban secondary residences on a property. 

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Is your legal house in order?

Some questions to discuss with your roommate or tenant include:

• If your in-law suite is a detached structure, who will own it?
• Will you charge rent? If so, how much?
• Who will pay any increase in utility costs and real-estate taxes that this new unit creates?

There are several ways to address these issues, says Todd Jackson, CEO of Jackson Design and Remodeling in San Diego, which specializes in home additions for parents and in-laws. "Often, the parent is selling the home they are currently living in and applying that profit to the remodel. A parent may gift the money to the child over a long period of time for an in-law addition."

Sometimes, adult children move into their parents' house and invest the remodeling money into that dwelling, which ultimately will be left to the children in a will, Jackson says.

Foresight can pay off, he says: "The most successful in-law-suite remodeling projects integrate the acknowledgement of a major life transition."

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Do you have the space?

In-law suites can be basement remodels, second-floor additions or new detached structures. The size can be as small as 400 feet, with 300 square feet of living space, a closet and a bathroom, Jackson says.

A comparison to keep in mind: Most one-bedroom apartments are 500 to 700 square feet.

At Stanton Homes, in Apex, N.C., for example, the most-requested models are 500 square feet or larger, allowing for a 12-by-15-foot bedroom, a 12-by-15-foot sitting room or living room, a full bath and a walk-in closet.

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Where do you put it?

There's more to consider than just how close you want your tenant — or how close your tenant wants to live to you. The space must comply with your property lines, whether you are building an addition or a new dwelling.

Research all setback requirements. These include lot lines and the necessary distance between external walls and sidewalks, streets and alleys. Often, you can find setback information on the site plan a developer files with the city or county, as well as in neighborhood covenants. Builders or real-estate agents may find this information for you, as well.

"If there is not a survey on file, homeowners might have to have one done" by a licensed surveyor, says Penny Hull, vice president of business development and marketing at Stanton Homes.

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Do you have the right utilities?

It's critical to consider how electricity, gas, plumbing, heating and air conditioning play into your in-law suite. They also may eat up much of your construction budget.

For example, it may be difficult to link the electricity from your home's existing electrical box. If you are remodeling a garage or creating an apartment above the garage, you may have to excavate the yard to link your pipes and wires there. If you're simply converting your basement, you may have to run a gas line from your existing kitchen to the new quarters.

These decisions all carry different price tags, Hull says.

"The cost (of new utilities) will vary depending on where the suite is located," Hull says. For example: "If the suite is above a separate garage, it will be more costly to run utilities and water lines than if the suite is part of the home itself."

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What type do you need?

An in-law suite can range from a bedroom and small eating area to a unit with a large bedroom, living room, full-service kitchen, eating area, separate entrance and utility room.

"Property size can dictate the decision," Hull says. "For example, you may have to 'build up' on a smaller lot, in which case you might need to think about an elevator to a second-floor mother-in-law suite. Privacy is also an important consideration that could require a separate entrance or more isolated portion of the home."

In some cases, homeowners also must build a disabled-accessible entrance for their tenant. This kind of suite should offer "wider openings in the doors throughout," Jackson says. "An oversized master bathroom is an important part of the floor plan even if (it's) not (American Disability Act) compliant. The (bathroom) design should include a curbless shower floor for easy roll-in access, grab bars and plenty of space around the sink and toilet."

Often, a tenant will want a kitchen. Homeowners should know, however, that while a small kitchenette for a coffee maker and a microwave is fine, many municipalities don't allow two kitchens in the same house, Jackson says. Some additions also include a place for a washer and dryer.

Also: "An outdoor area, such as a private patio with access to a backyard or garden, is a wonderful way to bring natural serenity and a sense of connection to the outside world to an in-law suite," Jackson says.

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Option 1: Garage conversion

Transforming your garage into an in-law apartment — as was the case in this home in Summerville, S.C. — can be practical and more economical than an addition. But it also may present some complications, depending on your area's zoning requirements, Jackson says.

Will zoning allow for the increase in square footage for your home? Will you miss the parking? Some municipalities also mandate that homeowners have some form of off-street parking.

The average garage conversion with a bathroom can range from $45,000 to $70,000, Jackson says. Adding the same square footage with new construction can cost $90,000 to $125,000.

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Option 2: Basement remodel

Walkout basements can accommodate in-law suites, but there are special considerations to keep in mind, Hull says.

For example: Does your tenant have any mobility issues? Is disabled accessibility required?

"You may need an additional driveway that wraps to the rear of the home for easy access to the basement," Hull says. "Access to the rest of the home may also be an issue. If so, or if the person who will be using the suite is elderly, the stairway could be a (challenge)," Hull says.

But adding a suite to an otherwise unfinished basement can cost less than expanding the square footage of the home's main floor, she says.

The price to remodel your basement to accommodate an in-law can range from $15,000 to $50,000, according to Eric Giordano, owner of Giordano Contracting Inc., in the Boston area. That range can be stretched by the types of appliances and finishes you choose.

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Option 3: Adding new rooms

Homeowners' most common request of builders when designing an in-law suite is to balance private space while fostering interaction among everyone in the home, Hull says.

Most Stanton Homes clients "don't really want a separate existence," she says. "And for many, the in-law suite is for a family member who has accessibility needs and requires lots of attention, so it's handy to have everyone nearby."

Many construction companies can "build up, build out, build under or build a separate structure to accommodate in-law suites," Hull says. Building up — adding rooms by making the house taller — can be less expensive than, say, placing a new cottage on your property.

Building out also can work, "As it allows for first-floor access, with shared walls and expansion of the existing foundation — which costs less than a separate home," Hull says.

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Option 4: Separate cottage

Building an auxiliary structure is the least cost-effective method, Hull says, because nothing is shared. "Insulation, exterior walls, foundation, plumbing, electrical must all be set up to support the separate space."

Stanton Homes has built detached living spaces for some clients as part of custom-home design packages.

An above-garage apartment also can be considered a detached living space. This unit in King Farm, Rockville, Md., is accessible via stairs that are separate from the rest of the house. But that approach can create accessibility snags, especially for tenants with mobility issues, Hull says.

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