The U.S. Department of Housing and Urban Development (HUD) recently announced a new FHA ADU policy that makes it easier for homebuyers to qualify for FHA-insured mortgages if the property has an accessory dwelling unit (ADU).
FHA ADU Policy Changes
The new FHA ADU policy contains several fundamental changes:
- You can now count rental income from ADUs when calculating your debt-to-income ratios for FHA loan eligibility. ADUs are small secondary housing units built with, attached to, or on the same lot as a larger primary residence.
- For existing ADUs already generating rental income, lenders can consider 75% of the current rents when underwriting an FHA mortgage.
- For new ADUs added to existing homes, such as garage conversions or even basement or add-on units, lenders can factor in 50% of the expected future rents.
- Appraisers also have new guidance to thoroughly inspect, assess, and report on ADU features and likely rents as part of the home appraisal process.
Why the FHA ADU Policy Matters
The FHA’s ADU policy change aims to address the affordable housing crisis by making it easier for buyers to utilize ADU income potential when qualifying for mortgages. Key benefits include:
- Expanding access to homeownership and wealth-building, especially for first-time homebuyers.
- Increasing the supply of affordable rental housing in needed neighborhoods.
- Allowing FHA financing for new construction homes built with ADUs.
- Helping homeowners like you gain wealth through ADU income.
Implementing the New FHA ADU Guidelines
We can help homebuyers and homeowners utilize the new FHA ADU guidelines. The policy change allows homebuyers to tap into an underutilized source of income for mortgage qualifications.
This extra income can be beneficial when mortgage rates are high.
The FHA’s new ADU policy opens financing options for buyers interested in ADU homes.
Contact Steve Silver at Silver Mortgage, 1-800-920-5720.
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