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You can’t add home addition costs to an existing mortgage, but you can include them in a new mortgage if you take out a rehab loan. Rehab loans—FHA-backed 203k loans and conventional rehab loans—are for more than the value of a property, and the excess is meant to cover the cost of a renovation or home addition.

A new space over the garage offers several upsides, including added living space, more storage space, and boosted home value from the addition. If you create an attached ADU with the space, you could secure more privacy for you and any guests you have, or even some rental income if you rent the area. However, there are some drawbacks to consider, too, including the high up-front cost, the potential need to increase structural integrity, and size restrictions since garages are smaller than an entire floor of your home.

The requirement for building permits varies by location, but most building departments will require permits for any changes to the structural components of a home. They’ll also require them for changes to the plumbing, electrical, and HVAC components, as well as any permanent improvements to the land, including concrete patios or foundations for additions or outbuildings. You also might need permits for things like roof replacement and window replacement, depending on your local government.

For a garage to count as living space—and towards your home’s total square footage—it needs to be attached to the rest of your home and have permanent finishings such as proper insulation, finished walls and ceilings, and adequate ventilation. It also needs to be livable at all times of the year, so it should be heated if it gets cold in the winter and cooled for hot summers.