Massachusetts Affordable Homes Act: ADUs, Homebuyers, Eviction Sealing

The Massachusetts Affordable Homes Act, signed by Governor Maura Healey on August 6, 2024, authorizes $5.16 billion in housing spending over five years and makes nearly 50 policy changes designed to bring down housing costs across the Commonwealth.¹ Enacted as Chapter 150 of the Acts of 2024, it is the largest housing investment in state history.² For most residents, the law shows up in four concrete ways: homeowners can now add a backyard apartment without asking the town’s permission, renters can seal many eviction records, first-time buyers have more down payment help, and public housing tenants are in line for long-overdue repairs.

Accessory Dwelling Units Are Now Allowed by Right

The most immediate change for homeowners is that accessory dwelling units (ADUs) are allowed by right in every single-family zoning district statewide. Before the Act, many municipalities required a special permit or banned them outright. The amended M.G.L. c. 40A, § 3 removes that local veto: a city or town cannot require a special permit or other discretionary approval for a single ADU on a single-family lot.³

The size cap is the smaller of two measurements: half the gross floor area of the main home, or 900 square feet. A 1,400-square-foot house therefore tops out at a 700-square-foot ADU, not 900. The unit needs its own entrance, either from outside or through a shared hallway that meets building code egress requirements.⁴

Parking rules are capped too. Municipalities cannot require more than one parking space for an ADU, and if the property sits within half a mile of a commuter rail station, subway stop, ferry terminal, or bus station, they cannot require any additional parking at all.³ Towns cannot require that the owner live in either unit, so you can rent both. They do keep the ability to impose short-term rental restrictions and reasonable site plan rules, including setbacks and height limits.⁴ Want more than one ADU on the lot? A special permit is still required.

The Healey administration estimates these rules will produce 8,000 to 10,000 new ADUs across the state over the next five years.⁵

Paying for an ADU and Handling the Tax Side

Construction for a detached ADU generally runs $150 to $500 per square foot, which puts a 700-square-foot unit somewhere between roughly $105,000 and $350,000 depending on design, site conditions, and finishes. That’s real money, and the financing landscape has shifted to accommodate it.

FHA-insured mortgages now let lenders count projected ADU rental income when qualifying borrowers. On a property that already has an ADU, lenders can use 75 percent of estimated rent. For a borrower converting a basement or garage under the FHA 203(k) rehabilitation program, lenders can use 50 percent of projected rent. Fannie Mae similarly allows HomeReady borrowers to include ADU rental income.⁶

Rental income is taxable, but many of the costs are deductible: the portion of property taxes, insurance, utilities, maintenance, and depreciation attributable to the rental unit.⁷ Residential rental property depreciates over 27.5 years under current IRS rules.⁸ One trap at sale time: if the ADU is a separate structure used for rental, only the gain tied to the residential portion qualifies for the federal capital gains exclusion under Section 121. Gain tied to the rental unit does not, and any depreciation claimed after May 6, 1997 gets recaptured regardless.

Help for First-Time Homebuyers

Two Act-funded programs matter most if you’re buying. MassDREAMS, backed by $50 million from the Affordable Housing Trust Fund, provides down payment assistance to income-eligible first-time homebuyers.¹ The CommonWealth Builder program, with $100 million in capital authorization, pays to build homes specifically priced for affordable ownership rather than rental.

These stack on top of MassHousing’s existing down payment assistance, which offers up to $30,000 to eligible first-time buyers who pair the help with a MassHousing mortgage.⁹ The funds can cover the down payment, closing costs, rate buydowns, or upfront mortgage insurance premiums.

Sealing Eviction Records

Renters now have a path to petition courts to seal certain eviction records, which addresses a longstanding problem: even a dismissed case can block future housing applications because private screening companies flag any filing. This provision took effect in May 2025.¹⁰

Eligibility depends on how the case ended. If the case was dismissed or the tenant won, the record can be sealed once the appeal period passes, typically 10 days after judgment. For evictions under Chapter 139, Section 19 (sometimes called “speedy evictions”), the appeal period is 30 days. Cases that ended in a negotiated agreement follow different timelines depending on whether the eviction was based on nonpayment of rent, a lease violation, or a no-fault reason such as a landlord reclaiming the property.

The law recognizes four categories for sealing purposes: no-fault evictions, nonpayment evictions, fault-based evictions, and Chapter 139 civil actions. Each has its own eligibility window and conditions. Tenants file a petition with the court that handled the original case, and the court decides whether sealing is appropriate.

Public Housing Repairs

Massachusetts maintains more than 43,000 units of state-aided public housing, much of it decades old and carrying years of deferred maintenance. The Act commits $2 billion in new capital authorization for repairs and improvements, which local housing authorities can put toward replacing failing heating systems, repairing roofs, upgrading electrical panels, and improving accessibility.¹ A separate $150 million is dedicated to decarbonizing public housing, and $15 million to accessibility upgrades.

A $200 million Public Housing Demonstration Program lets authorities pursue market-driven strategies and leverage private resources to maintain, preserve, and create units.¹ Tenants in units transferred or redeveloped under these programs keep their existing rights, including lease terms, eviction protections, grievance procedures, and the right to return after construction.¹¹

Tax Credits That Shape What Gets Built

Three tax credits in the Act will influence what developers put up over the next several years. The new Commercial-to-Residential Conversion Tax Credit covers 25 percent of qualified rehabilitation costs, capped at $5 million per project, and is transferable so developers can sell it to another taxpayer if they lack state tax liability. It targets underused office space in downtowns.¹¹

The Multi-Family Affordable Housing Tax Credit, previously operating under temporary authorization, is now permanent, and its annual cap doubles from $55 million to $110 million.¹¹ The Community Investment Tax Credit, which encourages private donations to community development corporations, also received an increased annual cap. Projects seeking any of these credits must meet specific affordability thresholds.

Seasonal Communities Designation

If you live in a town where second homes and vacation rentals have priced out year-round residents, the Act creates a new “Seasonal Communities” designation primarily aimed at Cape Cod, the Islands, and the Berkshires. Designated towns gain authority to impose year-round occupancy restrictions, create local or regional housing trust funds, use zoning flexibility for undersized lots and tiny homes meant for permanent residents, expand residential tax exemptions for primary residences, and access seasonal communities grant funding.¹ Towns can also set housing preferences for essential workers and artists, provided they comply with fair housing laws. If your community isn’t in that geographic profile, this tool won’t apply.

Preserving Expiring Affordable Units

For affordable housing units whose affordability restrictions are about to expire, the Act gives the Executive Office of Housing and Livable Communities a 120-day option to purchase those units at appraised value before they can convert to market rate. If the office does not exercise that option, it retains a right of first refusal to match any subsequent bona fide offer for 120 days after receiving written notice of the owner’s intent to sell.¹¹ It’s one of the less publicized provisions, but it works against the quiet loss of existing affordable inventory as older deed restrictions age out.

1
Mass.gov. The Affordable Homes Act: Smart Housing, Livable Communities
2
General Court of Massachusetts. Bill H.4977 – An Act Relative to the Affordable Homes Act
3
Mass.gov. Massachusetts General Laws c.40A Section 3
4
Mass.gov. Accessory Dwelling Units
5
Mass.gov. Governor Maura Healey Signs Most Ambitious Legislation to Address Housing Costs in State History
6
Fannie Mae. Accessory Dwelling Units
7
Internal Revenue Service. Topic No. 509, Business Use of Home
8
Internal Revenue Service. Residential Rental Property (Including Rental of Vacation Homes)
9
MassHousing. Down Payment Assistance Up to $30,000
10
Mass.gov. Sealing Eviction Records: Coming in May 2025
11
General Court of Massachusetts. Acts of 2024 Chapter 150