New Financing for Homeowners Adding or Refinancing Accessory Dwelling Units (ADUs)

If you're a homeowner thinking about adding a "granny flat" or an extra unit to your property (an ADU), or if you already have one, good news: the Federal Housing Administration (FHA) is now offering loans for this.

What's an Accessory Dwelling Unit (ADU)?

An ADU is a smaller extra living space, like a guest house or apartment, usually separate from your main home. People use them for guests, as rental properties, or for elderly family members who want to downsize without moving.

ADU Popularity

ADUs are becoming more popular, especially in places where housing is expensive. California, for example, approved a lot of ADUs in 2022. Other cities like Denver, Chicago, and Tucson are also seeing this trend. Even Phoenix and California have made it easier to buy and sell ADUs.

FHA Loans for ADUs

FHA loans can help you buy a home with a low down payment. Now, they also cover ADUs. This means you can finance your ADU project or include rental income from an existing one.

The goal is to make housing more affordable and help people build wealth. But there are rules: if you already have an ADU, only 75% of its rental income counts in your loan application. If you're building a new one with a 203(k) loan, only 50% of the rental income counts.

If you have questions, please reach out to me!