Basement, Backyard, or Garage? Choosing the Right ADU Type for NYC Homes

With ADUs now legal in New York City, one of the biggest questions homeowners are asking is: What kind of ADU can I actually build on my property?

NYC’s new building rules recognize five official types of ADU housing, ranging from basement units to backyard cottages to prefab structures.

In this article, we’ll walk through each type — what it is, its pros and cons, and which one might be the best fit for your lot, goals, and budget.

The 5 Legal Types of ADUs in NYC

NYC recognizes five official ADU types under Appendix U, each with its own classification — U201 through U205

• U201: Interior or attached

• U202: Basement or cellar

• U203: Firewall-separated addition

• U204: Detached backyard unit

• U205: Manufactured or prefab home

These are the only permitted configurations for legal ADU construction in NYC. 

Read on for a detailed breakdown of each type.

U201 – Interior or Attached ADU

This type of ADU housing is created within the existing home or as a connected extension, such as an attic conversion, rear bump-out, or side addition. It shares a foundation and some structural elements with the primary residence but functions as a separate living unit.

Pros:

• Lower construction costs

• Faster permitting and fewer zoning hurdles

Cons:

• Reduces usable space in the main home

• Less privacy compared to detached options

Best for: Homeowners with smaller lots, growing multigenerational households, or those on a tighter budget

U202 – Basement or Cellar ADU

This ADU type involves converting an existing basement or cellar into a legal, code-compliant living unit. It’s one of the most popular forms of adu construction in NYC, especially in boroughs with large single-family homes.

Pros:

• Makes use of existing spaceOften faster and more affordable than new construction

Cons:

• Must meet strict requirements for ceiling height, natural light, ventilation, egress, and flood zone safety

Best for: Homes with dry, well-maintained basements and enough ceiling clearance for legal occupancy

U203 – Firewall-Separated Addition

This ADU is built as a new addition to the home, but it's separated by a two-hour fire-rated wall. It allows the unit to function independently while still being technically connected to the main structure.

Pros:

• Adds usable square footage

• Provides more privacy than interior units

• Maintains clear separation between households

Cons:

• Requires more complex design and construction

• Subject to additional zoning and code review

Best for: Homeowners with side yards or corner lots who want a distinct, private unit without a detached structure

U204 – Detached Backyard ADU

This is a freestanding structure located in the rear yard, completely separate from the main home. Detached ADUs offer the highest degree of privacy and flexibility, making them especially appealing for long-term renters or extended family.

Pros:

• Maximum privacy for both households

• Great option for generating rental income

• Doesn’t impact the layout of the main home

Cons:

• Requires sufficient lot depth and rear yard access

• Must comply with setback rules and height limits

Best for: Homes with larger or deeper lots that allow space for a second building

U205 – Manufactured or Prefab ADU

This type of ADU is a factory-built structure (modular or panelized) that’s delivered to the site and installed in the rear yard. It’s built to meet the same code standards as a stick-built home but can reduce construction time significantly.

Pros:

• Faster timeline and less on-site disruption

• Predictable costs and streamlined build process

Cons:

• Still requires Department of Buildings (DOB) approval

• Limited customization compared to fully custom builds

Best for: Homeowners prioritizing speed, simplicity, and efficiency

How to Choose the Right Type

Choosing the right ADU isn’t one-size-fits-all — it depends on your lot, budget, and goals. Here are some key questions to help guide your decision:

• Do you have a deep backyard with at least 5 feet of clearance from property lines?

  • You may be eligible for a detached backyard unit

• Is your basement dry, at least 7 feet tall, and already partially finished?

  • A basement ADU could be the fastest and most affordable option

• Is your lot narrow or attached to neighbors on both sides?

  • Consider an interior or attic conversion, or a second-story addition over a garage

• Do you want complete separation between households?

  • A firewall-separated side or rear addition offers privacy without going fully detached

• Is speed and budget your top priority?

  • A prefab or manufactured ADU may give you faster results with fewer surprises

• Are you planning to rent the unit?

  • A detached ADU or basement apartment offers better privacy and income potential

    
    

Review your space, your purpose (rental vs family use), and your property's zoning limits. From there, the best fit usually becomes clear.

Still Not Sure?

New York City now offers more ADU flexibility than ever — but choosing the right path depends on your unique property.

👉 Book a free consultation to find out which ADU type fits your home, your lot, and your life.