FHA Asks Public for Input on Proposed ADU Changes

adu input fha manufactured housing washington dc ibs vegas 23
Attendees at the International Builder's Show in January 2023 tour an ADU on display in the outdoor village at the Las Vegas Convention Center.

The Federal Housing Administration has released a draft update of guidelines for insuring mortgages on single-family homes with accessory dwelling units.

The FHA is asking for feedback on proposed changes.

The proposal aims to provide greater flexibility in calculating market rent and incorporating ADU rental income into qualification for FHA-insured mortgage financing. Finalizing these updates would enable more borrowers, including those seeking 203(k) renovation loans, to qualify for FHA financing for ADU properties. The proposal aligns with the Biden-Harris Administration’s Housing Supply Action Plan to address housing shortages and increase affordability.

“FHA is at the forefront of the Administration’s efforts to increase housing supply and affordability. With housing supply constraints and ADUs gaining popularity nationwide, an updated policy has the potential to expand opportunities for low- and moderate-income homeowners to benefit from the wealth-building potential of ADUs while supporting the affordable housing needs of their communities,” Julia Gordon, Federal Housing Commissioner said.

ADUs are small units of housing constructed inside, attached to, or on the same property as a primary residence. While FHA programs currently allow for the purchase, rehabilitation, or refinance of properties that include ADUs, rental income from ADUs cannot be included in the borrower’s qualifying income. FHA is accepting feedback on the full set of proposals contained in a draft Mortgagee Letter until April 27, 2023, on its Single Family Housing Drafting Table web page.

MHInsider is the leader in manufactured housing news and is a product of MHVillage, the largest marketplace for manufactured housing.