The Federal Housing Administration (FHA) recently introduced a new housing policy designed to help more people become homeowners by making it easier for individuals to qualify for homeownership. This new policy simplifies the process of qualifying for a mortgage by allowing individuals to include the rental income from accessory dwelling units (ADUs) as part of their application.
ADUs as Rental Income:
Under the new policy, the FHA permits lenders to factor in the income generated from ADUs when evaluating mortgage applications. This means that the rental income from the ADU can be counted as part of the borrower’s qualifying income. This change creates new opportunities for individuals who aspire to own a home, especially those interested in properties with ADUs.
Benefits for Homeowners Adding ADUs:
For homeowners looking to add an ADU to their property, the new policy allows 50% of the estimated rental income from the unit to be used in their mortgage qualification under the FHA’s Standard 203(k) Rehabilitation Mortgage Insurance Program. This adjustment is significant because it empowers homeowners with limited incomes to create ADUs. These additional units can serve as rental housing, helping homeowners maintain their homeownership while also contributing to the supply of affordable housing.
Benefits for Homebuyers of Properties with ADUs:
For potential homebuyers interested in purchasing properties with pre-existing ADUs, the new FHA policy permits 75% of the estimated ADU rental income to count toward their eligibility for an FHA-insured mortgage. This provision makes it more feasible for buyers to afford homes with existing ADUs, thus increasing the availability of affordable housing options. > >
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