What Are ADU Soft Costs?

Key takeaways

• Soft costs pay for plans, permits, fees, loans and insurance. Hard costs pay for the building itself.
• Most soft costs come due before construction starts, so you need cash early.
• Contractor bids often leave them out. Look for “by owner” or “by others” in the fine print.
• In California, an ADU of 750 sq ft of interior living space or less pays no impact fees ². Other fees still apply.
• On one real city fee sheet, one extra square foot doubled the fee total ¹.
• No trusted dataset gives a standard soft-cost percentage. Price your own lines instead.

What soft costs mean, in plain English

Think of an ADU budget as two piles of money. One pile buys wood, concrete, wire, pipe and the crew’s time. That is the hard-cost pile.

The other pile buys everything you need around the building. You pay a designer to draw it. You pay an engineer to check it will stand up. You pay the city to review and inspect it. You may pay a lender to borrow the money. That second pile is soft costs.

The name has nothing to do with how big the bills are. Some soft costs, like impact fees, can run into thousands of dollars. “Soft” only means you cannot touch what you bought.

Why soft costs matter to you

Soft costs cause three common budget problems. First, they arrive early. You pay for drawings and plan check months before a builder starts. If your loan has not closed yet, that money comes from savings.

Second, they hide. A builder’s price usually covers construction only. If you compare that price with your total budget, you will think you have more room than you do.

Third, they are easy to underestimate. A fee sheet can have more than twenty lines. School and sewer fees are often collected by other offices. Each one is small enough to forget and large enough to hurt.

Knowing your soft costs early also helps you decide size and type. In California, the size of the unit can switch whole fee groups on or off. That is a design choice you make before you pay for drawings.

The soft-cost lines on an ADU

How soft costs build up, step by step

Soft costs follow the project calendar. Here is the usual order.

1. Feasibility. You check zoning, setbacks and utilities. A survey may be ordered here. A feasibility check is a free first pass.
2. Design. A designer or architect draws the unit. You usually pay in stages: a deposit, then a payment at each drawing set.
3. Engineering and energy. An engineer adds structural calculations (math showing the frame holds up). In California, energy forms show the unit meets Title 24, the state energy code.
4. Plan check. You submit drawings. The city charges a plan review fee, often at submittal.
5. Permit issue. The city collects the building permit fee and any impact fees. The school district collects its fee at its own office.
6. Utilities. Water and sewer providers may charge connection or capacity fees.
7. Financing. If you borrow, the lender charges closing costs, an appraisal and interest while you build.
8. Construction. Insurance during the build, and any re-inspection fees, run until final sign-off.

Steps 1 to 5 can all be paid before a single wall goes up. Plan your cash for that.

Design fees and engineering cost

Design is usually the largest soft cost you control. In California, Business and Professions Code § 5537 lets a person who is not a licensed architect prepare plans for a single-family dwelling of wood-frame construction up to two stories and basement. It also covers garages and other structures appurtenant to (that belong with) the home.

That is why many ADU plans are drawn by building designers. Choosing between an architect and a designer is a real price decision. For most wood-frame units it is not a legal requirement.

Engineering is separate. Even when a designer draws the plans, the city may require a structural engineer’s calculations. Slopes or poor soils can add a geotechnical (soils) report. Pre-approved plans from a city program can shrink the design line. See pre-approved ADU plans and the plan finder.

Sources: [3]

A real fee sheet: what one city charges before construction

Government fees are the soft cost you can check before hiring anyone. The City of Sacramento’s ADU fee estimate (CDD-0419, revised 12 July 2026) prices a new 749 sq ft ADU this way ¹.

Group subtotals are HyreADU’s addition of the sheet’s lines. The sheet excludes school fees, sewer and regional sanitation fees and special district fees, and covers Sacramento only.

At 750 sq ft the same sheet adds three impact fees and totals about $10,624; see ADU permit fees for why the line falls there. The chart shows the jump at that line.

Worked example: a soft-cost budget you can copy

A hypothetical budget for arithmetic only. Every amount except the Sacramento fee line is an invented input, not a typical price. Use it as a template and replace each line with your own quote.

Now see the timing. In this example, about $23,000 is due before construction starts. That money must come from cash or an early loan draw. The timeline planner lays the dates side by side.

Where soft costs hide on a bid

• In the exclusions list: “permits and fees by owner” or “engineering by others”.
• In an allowance (a placeholder amount) for design or permits that is lower than the real fee sheet.
• In design-build contracts, where design is bundled; ask for it as its own line so you can compare. See ADU design-build.
• In per-square-foot quotes, which usually cover construction only. See ADU cost per square foot.
• In your loan papers. A mortgage Loan Estimate is a three-page form that shows estimated closing costs; the lender must give it within three business days of your application ⁵.

The rules: California’s fee limits, then other states

Fee rules are set state by state. Outside California, check your state and city law. Our ADU laws by state table tracks them.

In California, the main rule is Government Code § 66311.5. It was renumbered from § 66324 by SB 543 (Stats. 2025, ch. 520) on 1 January 2026.

It bans impact fees on an ADU of 750 square feet of interior livable space or less ². Above that size, impact fees must be proportionate (scaled) to the main home’s square footage.

The rule does not cover plan review, permit or inspection fees. It also has separate limits on utility connection fees. For an ADU created inside an existing house or accessory building, a utility may not require a new connection or charge a connection fee. That can remove a whole soft-cost line from a conversion.

Sources: [2]

Financing costs: the soft cost people forget

If you borrow, the loan has its own costs. These include closing costs, an appraisal (a valuer’s report on the home) and interest while you build. The Loan Estimate form lists the estimated rate, monthly payment and total closing costs ⁵.

Timing matters here too. A Terner Center paper on ADU financing (July 2022) explains how renovation loans work.

The lender holds back the build money and releases it after an inspector confirms the work ⁴.

The same paper notes that lenders can release some funds for up-front costs such as materials, design and permit fees.

Ask your lender, in writing, which soft costs it will pay early and which you must cover from savings. See the ADU financing guide and the financing comparison.

Sources: [4] [5]

Soft costs compared with related cost terms

Cutting soft costs: what works and what backfires

Common mistakes about soft costs

Myth Soft costs are small.

Reality They can run to thousands of dollars. Sacramento’s fee sheet alone totals about $5,272 for a 749 sq ft unit and about $10,624 at 750 sq ft ¹.

Myth Soft costs are a fixed percentage of the build.

Reality We found no primary dataset that measures a standard share. Fees, design scope and loans vary too much. Price each line.

Myth My builder’s price includes permits.

Reality Only if the bid says so in writing. “By owner” in the exclusions means you pay.

Myth Small ADUs in California are fee-free.

Reality They are free of impact fees only ². Plan review and permit fees still apply.

What to ask before you sign anything

• Designer: Is the fee flat, hourly or a percentage? How many plan-check correction rounds are included?
• Designer: Do you include structural engineering and Title 24 energy forms, or are those separate?
• City: Do you publish an ADU fee estimate? How do you measure interior livable space?
• School district: What is your residential rate, and does my ADU size pay it?
• Water and sewer provider: Does my ADU type need a new connection?
• Lender: Which soft costs will you fund before construction? What are the closing costs?
• Builder: Which soft costs are in your price, and which are “by owner”?

Checklist: price your soft costs

1. Download your city’s ADU fee sheet. Our California fees-by-city study links the ones we have read.
2. Decide your target size and note which side of 750 sq ft it falls on (California).
3. Get two or three design quotes on the same scope.
4. Ask whether engineering, survey and energy forms are included.
5. Call the school district and each utility.
6. Add loan closing costs from your Loan Estimate.
7. Add insurance for the build period.
8. Mark each line with the month you will pay it.
9. Run the totals through the fee estimator and the cost calculator.

How soft costs feed the total

1. Design and engineering
2. plan check and permit fees
3. impact, school and utility charges
4. soft-cost total
5. + hard costs
6. = project estimate

Related guides, tools and research

• California ADU fees by cityPublished fee sheets, read line by line
• ADU fee estimatorWhich fee lines apply to your size
• ADU fee statisticsFee figures with their sources
• ADU cost guideThe whole budget
• ADU permits guideThe permit path, step by step

Related terms

ADU Hard Costs

ADU hard costs are the money spent physically building an accessory dwelling unit: site preparation, foundation, framing, roofing, windows, mechanical, electrical and plumbing systems, finishes, and the trenching that brings utilities to the unit, together with the contractor’s labor, overhead and profit.

ADU Permit Fees

ADU permit fees are the charges a city, county or utility district collects before and during the building of an accessory dwelling unit: plan review, the building permit, inspections, and in many places impact fees, school fees and utility connection charges.

ADU Cost Estimate

An ADU cost estimate is a written, itemized prediction of what it will cost to build a specific accessory dwelling unit on a specific lot, listing the work, materials, allowances, exclusions and assumptions behind the total.

ADU Design-Build

ADU design-build is a way of delivering an accessory dwelling unit in which one firm is responsible for both designing the unit and building it, usually under one contract or a design agreement that rolls into a construction contract.

ADU Engineer

An ADU engineer is a licensed engineer who designs the parts of an accessory dwelling unit that carry loads or deal with the ground, such as the foundation, beams and earthquake bracing, and signs the calculations the city reviews.

ADU Cost Calculator

A tool that estimates an ADU's total cost from its type, size, location and site conditions.

ADU Financing

How homeowners pay for an ADU: cash, home equity loans and lines of credit, cash-out refinances, construction and renovation loans, and grants where they exist.

Also referenced from: ADU Plans, ADU Cost Per Square Foot, ADU Cost Estimate, ADU Hard Costs, ADU Permit Fees, ADU Utility Connection, ADU Design-Build, Home Equity Loan, ADU Grant, ADU ROI, ADU Architect, ADU Engineer