Updated Freddie Mac Guidelines For ADU Financing Help Homeowners

Financing for Accessory Dwelling Units (ADUs) has become more streamlined, thanks to updated Freddie Mac guidelines. Aimed at making ADU appraisal and income verification clear, Freddie Mac’s Appraisal Checklist helps determine ADU eligibility by specifying requirements such as a separate entrance, independent utility, and rental market comparables.

The updated FHA policies for ADUs introduce several financial benefits:

• Rental Income Consideration: Up to 75% of estimated ADU rental income can qualify certain borrowers for FHA-insured mortgages, enhancing access to ADU-inclusive homes.

• Rehabilitation Financing: Borrowers can use 50% of expected rental income from a new ADU to qualify for FHA’s 203(k) program, supporting garage or basement ADU conversions.

• Appraisal Requirements: ADU-specific guidelines for appraisers help refine ADU valuation.

• New Construction: FHA allows financing ADUs in new construction projects, boosting ADU availability.

This means that when an ADU is part of a primary residence, rental income from it can now support loan qualification with Freddie Mac, provided zoning and market analysis requirements are met. These changes align with HUD's latest initiatives to expand affordable housing through ADUs​.

For more information, check out the Freddie Mac checklist and HUD’s recent announcement.