What an ADU Actually Is

ADU stands for accessory dwelling unit. It is a second, smaller home on the same lot as your main house, and it has to work as a complete living space on its own.

In Arizona, most people call it a casita. Some call it a guest house. The words get used interchangeably, but the city sees them all the same way once the unit includes the required features.

Casita, Guest House, or ADU

A true ADU needs a kitchen with a sink, a cooking appliance and refrigeration, a full bathroom, a living area, and a place to sleep. If a structure is missing one of those pieces, your city may classify it as something else entirely, which changes what you can do with it.

This matters more than people expect. A backyard casita that qualifies as an ADU can be rented out. A room addition without a kitchen usually cannot.

Attached, Detached, or Converted

There are three common approaches. An attached unit shares a wall with your home. A detached ADU sits as its own building in the yard. A conversion turns an existing garage or storage space into living quarters.

Conversions are the cheapest path. A garage conversion in the Valley generally runs $80,000 to $150,000. A detached casita costs more because you are pouring a new foundation, running new utilities, and framing a complete structure from the ground up.

Why So Many Arizona Homeowners Are Building Now

In May 2024, Arizona signed House Bill 2720 into law. Starting in January 2025, it required cities with at least 75,000 residents to allow accessory dwelling units on single family lots as a matter of right. No special use permit. No variance. No public hearing.

A follow up bill, HB 2928, extended similar requirements to counties beginning January 1, 2026.

For homeowners who were told no for years, that was a significant shift.

What It Costs in 2026

Cost Per Square Foot

Most Phoenix area projects land somewhere between $200 and $350 per square foot. Simpler builds with basic finishes can come in lower, closer to $150, and high end work in places like Paradise Valley can push well past the top of that range.

The spread is wide because no two lots are the same. Site conditions, utility distance, finish level, and design complexity all move the number.

Example Project Costs

Here is roughly what different sizes look like when you price a new casita cost in the Phoenix market:

• Garage conversion, 400 to 500 sq ft: $80,000 to $150,000
• Small detached casita, 400 sq ft: $100,000 to $160,000
• Mid size casita, 600 to 700 sq ft: $150,000 to $245,000
• Full size ADU, 1,000 sq ft: $200,000 to $300,000 and up
• High end custom ADU with premium finishes: $350,000+

Most homeowners building a detached unit in the Valley end up somewhere between $150,000 and $280,000 all in.

What Moves the Price

Finish level is the biggest lever you control. Quartz counters, tile showers, upgraded windows and custom cabinetry can add tens of thousands without changing the footprint at all.

Site access matters almost as much. If a concrete truck cannot reach your backyard, the work gets slower and more expensive.

The Costs People Forget to Budget For

This is where most ADU cost estimates fall apart. The build itself is only part of the picture.

Design and Engineering

Before anything gets built, you need plans. That means architectural drawings, structural engineering, and a site plan showing exactly where the structure sits relative to your property lines.

Expect this phase to take one to two months and to represent a real line item in your budget, not a rounding error.

Soil, Site Work, and Utilities

Phoenix soil is not uniform. It ranges from sandy loam to hardpan caliche, and expansive clay in some areas requires an engineered slab that costs more than a standard foundation.

These are the items that surprise people most often:

• Soil testing and engineered foundations when caliche or expansive clay is present
• Utility runs for water, sewer, gas and electrical from the main house or street
• Electrical panel upgrades if your existing service cannot carry the added load
• Grading and drainage so water moves away from both structures
• Demolition or tree removal to clear the building pad
• Site access costs when gates are too narrow for equipment

Ask any ADU builder you interview how they handle hard dig. A fixed allowance written into the contract is far better than an open ended change order.

Permits and Fees

In Phoenix, permit and plan review fees run roughly $3,000 to $4,600 for a build valued between $150,000 and $250,000, based on the January 2026 fee schedule. Impact fees and utility connection charges can add more depending on your location.

Your ADU permit is separate from any HOA approval, and one does not substitute for the other.

How the Rules Differ by City

Phoenix

For lots up to 10,000 square feet, the maximum size is 1,000 square feet. On larger lots, the cap is 3,000 square feet or 10 percent of the net lot area, whichever is smaller. No unit may exceed 75 percent of the main home’s gross floor area.

Detached setbacks are generous. Three feet from an interior rear or side lot line, five feet from a street side line, and zero along a fully dedicated alley. State law caps rear and side setbacks at five feet statewide.

Phoenix does not require additional parking.

The Rest of the Valley

Rules vary more than most homeowners expect, so confirm with your city before you design anything:

• Scottsdale: First unit up to 1,000 sq ft or 75 percent of the home, whichever is less. A second or third is capped at 500 sq ft. Detached units may sit five feet from side and rear lines.
• Mesa: 1,000 sq ft or 75 percent of habitable area, whichever is less. Five foot rear and side setbacks. No added parking.
• Gilbert: Same size cap. Five foot setback for units up to ten feet tall, plus one additional foot for every foot of height above that.
• Chandler: Same size cap, but one off street parking space is required. Chandler also enforces exterior design standards and shared utility meters.

Anyone searching for a Scottsdale casita builder should pay particular attention to that 500 square foot limit on additional units, since it changes what a second structure can realistically be.

Setbacks and Lot Size

Before you fall in love with a floor plan, have someone measure your usable building area. Setbacks, easements and existing structures often leave less room than homeowners assume, and that single constraint shapes the entire design.

Timeline and Getting Started

What the Schedule Looks Like

A realistic Phoenix ADU project runs eight to twelve months from first design meeting to final inspection.

Design and permitting take two to four months. City plan review alone typically runs 60 to 90 days, though it has come back in 45 days and stretched to 120 depending on workload and how complete the application was.

Construction takes another six to eight months.

Choosing a Builder

Verify the license at roc.az.gov and confirm both the license and the bond are active. Ask whether crews are in house or subcontracted, and ask which trades get subbed out.

Most importantly, ask what is not included in the bid. That single question surfaces more hidden cost than any other.

Questions Worth Asking Up Front

A good ADU contractor should be able to answer all of these before you sign anything. If you are learning how to build an ADU in your backyard for the first time, start here.

Ask about soil allowances, utility connection costs, HOA submission timelines, and what happens to the schedule if plan review comes back with corrections.

Belgravia Homes designs and builds custom ADUs and casitas across Phoenix, Scottsdale, Gilbert, Chandler and the surrounding Valley. If you are weighing a backyard casita and want real numbers for your specific lot, we are happy to walk you through it.