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The Federal Housing Administration (FHA) is implementing a new policy to ease the mortgage qualification process for some buyers by allowing them to include rental income from accessory dwelling units (ADUs) in their applications. This change permits lenders to consider ADU rental income in underwriting mortgages, improving borrowers' qualification prospects for FHA financing on properties with ADUs.
By enabling borrowers to include a percentage of estimated rental income from ADUs in their applications, the FHA aims to enhance homeownership opportunities, address housing scarcity, and stimulate ADU production for rental housing. The FHA also plans to introduce ADU-specific appraisal requirements to better capture potential rents, Realtor.com reports.
“This not only helps more people qualify for a mortgage and build wealth, it also helps to boost the supply in neighborhoods where housing is least available,” Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon said during the Mortgage Bankers’ Association’s annual press conference on Monday.
For homeowners looking to add an ADU, 50% of the estimated rental income from the unit will be used to qualify for a mortgage under the FHA’s Standard 203(k) Rehabilitation Mortgage Insurance Program. “This will enable more homeowners with limited incomes to build ADUs, helping them sustain homeownership and expanding the production of ADUs as rental housing,” the FHA said.
