# New Real Estate Financing Law Will Make It Easier to Purchase a Primary Residence w/ ADU
- Link: https://jackschobergrealestate.com/new-financing-law-will-make-it-easier-to-purchase-a-primary-residence-adu-combo/
- Published: 2023-11-06T08:17:03-08:00
- Author: Jack Schoberg
## New Real Estate Financing Law Aims to Increase Home/ADU Sales
To address the nation’s affordable housing crisis, the Federal Housing Administration
[announced a new policy](https://archives.hud.gov/news/2023/pr23-237.cfm) Monday
that will make it easier to buy or refinance a house with an accessory dwelling
unit or build a new ADU.
Previous rules for FHA-backed loans would allow lenders to consider rental income
from duplexes but not ADUs. Under the new policy, lenders can count income from
small housing units built inside, attached to, or on the same property as a primary
residence when underwriting a mortgage.
It will specifically allow for 75% of the estimated ADU rental income for some borrowers
to qualify for an FHA-insured mortgage on a property with an existing ADU. It will
also allow the use of 50% of the estimated rental income from a new ADU the borrower
plans to attach to an existing structure, such as in a garage or basement conversion,
to qualify for a mortgage under FHA’s renovation loans, also known as 203(k) Rehabilitation
Mortgage Insurance program.
What’s also new with this policy is that lenders can consider projected income,
whether it’s a buyer interested in purchasing a home with an unoccupied ADU or a
homeowner who wants to construct an ADU, said FHA Commissioner Julia R. Gordon.
“I think that is, in some ways, the most interesting aspect of our program because,
of course, one of the reasons we’re making this policy change is to help more borrowers
qualify for homeownership, and counting rental income is one way to do that,” Gordon
said.
The other big goal of the new policy is to help increase housing supply by bringing
new units onto the market, and that is “why we thought it was so important to try
to count a portion of that projected income even though it’s something that isn’t
tangible yet,” she said.
In addition, this new policy is intended to create more wealth-building potential
for first-time home buyers, seniors, and intergenerationally through homeownership.
The FHA doesn’t lend money directly to prospective or current homeowners, rather
it provides guarantees for loans issued by banks, which encourages lenders to make
loans to households or communities that might otherwise not be reached. The guarantees
are available only for loans that stay within the claim [limits set by the FHA](https://www.hud.gov/program_offices/housing/sfh/lender/origination/mortgage_limits).
Gordon said that No other real estate financing eligibility requirements have to
do with who the buyer is.
If a prospective home buyer wants to learn more about the real estate financing
policy or whether they are eligible, Gordon encourages first-time home buyers to
talk with a [Housing and Urban Development certified housing counselor](https://www.hud.gov/counseling).
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