How to Finance Your ADU in Missoula
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 Missoula
Montana SB 528 ADU Cost Protections
State law bans impact fees on ADUs, caps the land-use application review fee at $250, and removes owner-occupancy and extra-parking mandates — cutting thousands off a Missoula ADU versus comparable Western cities. Upheld by the Montana Supreme Court.
Value: $5,000–$20,000+ savedNeighborWorks Montana
Missoula-serving nonprofit offering down payment and gap financing for income-qualified households (HOME program loans roughly $2,500–$40,000). Homebuyer-focused, but useful when an ADU is part of a broader purchase or refinance plan.
Value: $2,500–$40,000Clearwater Credit Union (CDFI)
Missoula-headquartered and Montana's largest community development financial institution, offering local home-equity, home-improvement, and construction loans underwritten in Western Montana.
Value: Local ratesMontana Board of Housing
State housing finance agency offering reduced-rate first mortgages through approved nonprofit and local-government partners for income-eligible buyers.
Value: Reduced ratesTop ADU Lenders Operating in Missoula
Clearwater Credit Union
Local HELOCs & Construction Loans (Missoula HQ)- Rates: From 7.0%
- Max Loan: Up to 80% LTV
First Security Bank
Real Estate Construction Loans- Rates: From 7.25%
- Max Loan: Subject to LTV
First Interstate Bank
Home Equity Lines & Mortgages- Rates: From 7.5%
- Max Loan: Subject to LTV
RenoFi
Renovation Loans Based on After-Renovation Value- Rates: From 7.5%
- Max Loan: $500,000
Figure
Fast Online HELOC (5-Day Funding)- Rates: From 7.75%
- Max Loan: $400,000
LightStream
Unsecured Home Improvement Loans- Rates: From 7.49%
- Max Loan: $100,000
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