Indianapolis — city ADU rules and incentives

ADU legality: unclear

Stateunclear (Indiana accessory-dwelling framework)

Countywith-restrictions (Marion County unincorporated zoning)

Citywith-restrictions (City of Indianapolis Municipal / Zoning Code — Accessory Dwelling Units)

Indiana leaves ADU regulation to local municipalities under home-rule or Dillon-rule authority. Indianapolis permits ADUs subject to local conditions per its zoning ordinance.

City cost envelope

$124,975 all-in for a 525 sqft ADU (permit + build). Midpoint scenario.

Permit fee bundle: $1,600.

City viability (selected uses)

Long-term rentalyes

Short-term rentalwith-restrictions

Home officeyes

Relative supportyes

Marion County (consolidated City of Indianapolis-Marion County / Unigov) — county ADU rules and overlays

County ADU ordinance

Marion County is the operating jurisdiction for the consolidated City of Indianapolis-Marion County, established by Indiana's Unigov act of 1969 (IC 36-3) and codified in the City-County Council structure (~977,000 residents — Indiana's most populous county and the state-capital county). Under Unigov, the City of Indianapolis and Marion County government are consolidated; some 'excluded cities' (Beech Grove, Lawrence, Southport, and Speedway) retain independent municipal status with their own zoning ordinances, while the remainder of Marion County operates under a single Indianapolis-Marion County zoning code (Indianapolis Code of Ordinances Chapter 740, Consolidated Zoning and Subdivision Ordinance — CZSO). The Department of Metropolitan Development (DMD) administers zoning and permitting. ADU regulation falls under CZSO Article 5 (Use Standards); 'accessory dwelling units' are permitted in most single-family districts (D-1 through D-5) by right with size, parking, and owner-occupancy standards. The Indianapolis-Marion County City-County Council adopted Ordinance 167, 2018 (codified in CZSO updates) expanding ADU allowances; Ordinance 47, 2023 further refined ADU rules in response to housing-supply pressure.

County regulatory overlays

Indiana state — ADU law and programs

State ADU law

Indiana enacted statewide ADU-permissive housing legislation in the 2026 session. House Enrolled Act 1001 (HEA 1001), authored by Rep. Doug Miller (R-Elkhart), was signed by Governor Mike Braun on 2026-04-14. The bill makes ADUs and commercial-to-residential conversions permitted uses by right unless a city, town, or county affirmatively opts out by 2026-12-31 via local ordinance. The bill also caps building permit fee increases (180-day delay before new permit-fee ordinances take effect), restricts certain residential design and aesthetic regulations, and requires every Indiana local government to hold a public housing-supply hearing in 2026 and report annually to the Indiana Housing and Community Development Authority. Earlier related bills (HB 1005 in 2025) addressed parts of the housing framework but did not preempt local ADU rules; HEA 1001 is the first true statewide ADU floor.

State financing programs

Indiana does not operate an ADU-specific statewide loan, grant, or forgivable-loan program. The Indiana Housing and Community Development Authority (IHCDA) administers general homeownership, down-payment-assistance, and affordable-housing-development programs that can apply to properties with ADUs when eligibility criteria are met, but none target ADU construction directly. HEA 1001 (2026) gave IHCDA a new oversight role — receiving annual housing-progress reports from every local government — but did not create new ADU financing.

State housing programs

Indiana's primary state-level ADU program is the new HEA 1001 (2026) framework: ADU-by-right permitting unless opted out, capped permit-fee escalation, restricted design regulation, and required local public hearings and annual progress reporting to IHCDA. There is no statewide pre-approved ADU plan catalog, no statewide ADU impact-fee waiver, and no statewide ADU rebate program. Earlier discussion in HB 1005 (2025) of broader housing-process reforms set the policy stage for HEA 1001.

HEA 1001 ADU-by-right framework — ADUs are permitted uses statewide unless a city, town, or county opts out by ordinance before 2026-12-31. Localities that opt in (the default) must process ADU applications ministerially within their ordinary permit framework.
HEA 1001 building-permit-fee cap — Local building-permit-fee increases must be published 180 days before they take effect. Limits on the size and frequency of increases apply after 2026-12-31.
HEA 1001 local housing-supply hearing and reporting requirement — Every Indiana city, town, and county must hold a public hearing on housing supply in 2026 and submit annual progress reports to IHCDA on housing approvals, denials, and timelines.

Federal (United States) — ADU-relevant rules and programs

Federal ADU law

The United States has no federal statute that directly regulates accessory dwelling unit entitlement or design. Land-use authority over ADUs resides with states and local governments under the traditional police power. Federal engagement is limited to financing (Fannie/Freddie/FHA/VA/USDA), flood insurance (FEMA/NFIP), and discretionary housing programs (HUD), which are recorded in sibling sections of this file.

Federal financing programs

Federal housing-finance agencies and GSEs set nationwide underwriting rules that govern whether an ADU can be financed, appraised, and counted toward mortgage qualifying income. The relevant actors are Fannie Mae, Freddie Mac, FHA (HUD), VA, and USDA Rural Development.

Federal tax credits

There is no ADU-specific federal tax credit. ADUs may incidentally qualify for existing federal energy-efficiency and clean-energy tax credits when the ADU construction includes qualifying measures.

Federal housing programs

HUD administers several discretionary programs that can fund ADU-related activity at the grantee's election, but none is an ADU-specific program.

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