How to Finance Your ADU in Billings
Compare rates, find local lenders, and discover local grants to fund your backyard cottage or garage conversion in 2026.
Financing Options Comparison
| Loan Type | Rate | Max Amount | Pros | Cons |
|---|---|---|---|---|
| HELOC | 7.5% - 9.5% | Up to 85% LTV | Flexible draws Interest only period | Variable rates Requires current equity |
| Cash-Out Refi | 6.5% - 7.5% | Up to 80% LTV | Fixed rate Single mortgage | Resets 30yr clock High closing costs |
| Construction Loan | 7.0% - 9.0% | Based on future value | Great for low equity Large loan amounts | Complex draws Higher rates initially |
| Home Equity Investment | No Monthly Pmt | Up to $300k | No monthly payments Easy qualification | Give up future appreciation Expensive long-term |
Local Grants & Incentives in Billings
NeighborWorks Montana (NWMT)
Statewide down payment and gap-financing assistance (second mortgages) plus homebuyer education, with income limits. Not ADU-specific, but can free up equity or cash to help fund a build.
Value: $1,500–$50,000Montana Housing (Board of Housing)
Montana Department of Commerce bond-backed first mortgages and down payment assistance at below-market rates for eligible buyers, administered through participating local lenders.
Value: Below-market ratesMontana SB 528 Fee Preemption
State law bars ADU-specific impact fees, owner-occupancy mandates, and added parking requirements — the de facto Billings ADU incentive that keeps soft costs low and lets you rent both units.
Value: Saves $10K–$30KTop ADU Lenders Operating in Billings
First Interstate Bank
HELOCs & Construction Loans (headquartered in Billings)- Rates: From 7.5%
- Max Loan: Subject to LTV
Stockman Bank
Home Equity Loans & Lines of Credit- Rates: From 7.75%
- Max Loan: Subject to LTV
Billings Federal Credit Union
Home Equity Loans & HELOCs for Local Members- Rates: From 7.25%
- Max Loan: Subject to LTV
Altana Federal Credit Union
Home Equity Financing for Renovations & Builds- Rates: From 7.5%
- Max Loan: Subject to LTV
Valley Federal Credit Union
Fixed Home Equity Loans (Billings-based)- Rates: From 7.25%
- Max Loan: Subject to LTV
Rocky Mountain Credit Union
HELOC & Fixed-Rate Home Equity Options- Rates: From 7.5%
- Max Loan: Subject to LTV
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