Your Guide to ADUs in Denver: New Rules, Big Opportunities
With recent changes to Colorado law, building an ADU—Accessory Dwelling Unit—is now easier than ever for Denver homeowners. Whether you’re looking to add a backyard rental, a guest suite, or housing for family, ADUs can offer serious financial and lifestyle benefits.
But before you start planning, it’s important to understand what an ADU is, what’s changed in 2024–2025, and what it really takes to build one in the Denver area.
What is an ADU?
An ADU (Accessory Dwelling Unit) is a secondary housing unit located on the same property as a primary residence. In Denver, ADUs are commonly:
• A detached backyard cottage
• A converted garage or basement apartment
• An attached addition with a separate entrance
These small-footprint homes are typically between 400 and 1,200 square feet and include a kitchen, bathroom, living space, and a separate entrance.
New Colorado Legislation: What Changed in 2024–2025?
Thanks to new legislation passed in 2024, Colorado now requires many local governments—Denver included—to allow the construction of ADUs by right in most residential zones. That means:
• Less red tape
• Faster permit approvals
• More streamlined zoning laws across municipalities
As of 2025, cities like Denver, Boulder, and Lakewood have already started updating their municipal codes to align with the state’s mandate. You can learn more about the statewide law here and here.
Types of ADUs You Can Build in Denver
There are several ADU styles to consider, each with its own pros, costs, and zoning details:
1. Detached ADUs (aka Backyard Cottages)
• A completely separate building on your lot
• Offers the most privacy and flexibility
• Most expensive to build but highest rental potential
2. Garage Conversions
• Converts an existing garage into a livable space
• Often cheaper than new construction
• Works best for homes with alley access or a detached garage
3. Basement or Internal ADUs
• Adds a private entrance and full living space to your existing basement
• Cost-effective and ideal for multigenerational living
• Must meet egress and fire safety codes
4. Above-Garage Units
• Built above an existing garage or new garage structure
• Can serve as a rental or studio apartment
• Requires structural assessment and additional design consideration
Benefits of Building an ADU
✔ Generate Rental Income
ADUs can bring in $1,500–$2,500/month or more depending on the location and finish level.
✔ Increase Property Value
Well-designed ADUs add long-term value to your home—especially in Denver’s competitive housing market.
✔ Flexible Living Space
ADUs are ideal for hosting guests, aging parents, adult children, or even remote work setups.
✔ Address Housing Needs
With Colorado’s housing shortage, ADUs support affordable housing and allow residents to age in place.
Things to Consider Before You Build
Even with streamlined laws, there are still important factors to plan for:
Cost
Expect to spend:
• It's just so contingent on what you're building. You can get a base price with a short conversation though. Nothing is worse than posting a price, and then having to put our foot in our mouths! Reach out today, and we'll be able to get you an estimate rather quickly though!
• Detached units typically cost more than conversions
Permitting & Design
• You’ll still need to submit plans, pull permits, and follow Denver building codes
• Design matters—make sure the ADU matches your existing property’s style
Utility Connections
• ADUs need separate plumbing, electrical, and sometimes gas lines
• You may need to upgrade your existing systems
Property Layout & Zoning
• Your lot must meet minimum size and setback requirements
• Some neighborhoods (especially in older parts of Denver) may still have overlay restrictions
Learn more about the process from a legal standpoint here.
Are ADUs Allowed in Your Neighborhood?
Use Denver’s Property Zoning Tool to check if your address allows ADUs. Even if your neighborhood didn’t allow ADUs previously, new laws may now permit it.
If you’re outside of Denver (like Lakewood, Arvada, or Englewood), check your city’s latest zoning updates to confirm eligibility.
Final Thoughts: Should You Build an ADU in Denver?
If you’re a homeowner in the Denver metro area, now is one of the best times to explore building an ADU. The laws are finally catching up with demand, and the long-term value—both personal and financial—is real.
Whether you’re looking to create a rental income stream, make room for family, or just boost your property value, ADUs offer a smart, flexible option for the future of housing.
Thinking About Building an ADU?
Denver Dream Builders has helped homeowners throughout Colorado design and build high-quality accessory dwelling units that last.
We handle everything from permits and planning to construction and finishing touches—and we always start with a free consultation.
👉 Schedule your free consultation and let’s talk about what’s possible on your property.