FHA Now Accepting ADU Rental Income
Matt Boytz
October 23, 2023
In a huge change of policy last week the FHA has said you can now use ADU rental income to Qualify on your mortgage.
Previously only multi-family units could use the rents to add to your income. So what is an ADU? ADU’s or “Accessory dwelling units” are a secondary housing unit on a single family property. These are usually smaller in sizer (around 800 square feet or so depending on city and county laws). ADUs can be attached to the house, detached, or even part of it as long as it has all needed items (think mother in law suite)
ADU’s offer a chance to offset your mortgage payment via the rents (generally 75% of the current lease or market value) , as well as add another unit to the rental pool. But here is an even cooler addition to the program- FHA rehab loans called 203(k) loans, will now allow 50% of future ADU rents to be added to your income figures for a FUTURE built ADU that you are constructing with the rehab loan.
If you have more questions, shoot me an email! This should greatly help housing shortages, and affordability.