FHA’s new ADU policy provides expanded financing options for borrowers. 

The Federal Housing Administration (FHA) under the U.S. Department of Housing and Urban Development (HUD) has unveiled a groundbreaking policy to bolster housing affordability and increase homeownership opportunities. According to the press release, lenders can now include rental income from Accessory Dwelling Units (ADUs) when assessing mortgage applications. ADUs are smaller housing units located on the same property as the main residence, which can be leased out. These units have the potential to provide a significant boost to the housing supply, especially in densely populated areas. HUD Secretary Marcia L. Fudge praised the move, stating, “Increasing the supply of affordable housing and helping families to create generational wealth is what today’s action, making it easier to finance an accessory dwelling unit, is all about. This is a part of our work to help address the critical shortage of affordable housing in communities across the country and help people increase the value of their homes." Assistant Secretary for Housing Julia Gordon added that the policy primarily targets households with limited means, ensuring they can unlock the full benefits of homeownership. This new policy "not only helps more people qualify for a mortgage and build wealth, it also helps to boost supply in neighborhoods where housing is least available," Gordon said at the MBA conference in Philadelphia. Click Here for Mortgagee Letter 2023-17.

Source: National Mortgage Professional