By AJ LaTrace | Real Estate News
Homeowners who are looking to add an accessory dwelling unit (ADU) to their property or want to refinance their home and existing ADU now have another lending option.
Starting this week, the Federal Housing Administration has expanded financing to borrowers who have either already built an ADU — sometimes referred to as a “granny flat” or coach house — or are seeking to build one on their property.
What is an ADU?
ADUs are typically smaller, detached units built behind a primary residence or above a garage. They can be used for a family who wants extra space for visitors or a home office, they can be utilized as short-term or long-term rentals for additional income, or can be a solution for older homeowners who wish to “age in place” and downsize without selling their house.
The legality of what qualifies as an ADU — and the process to build one — varies from state to state and city to city.
The push for ADUs has been most visible in metros and states where high housing costs have pushed homeownership out of reach for many. Over 23,000 ADUs were permitted across California in 2022, according to a Washington Post story from May, while they have also become popular in Denver, Chicago, and Tucson.
Just last month, the Phoenix City Council approved the construction of new ADUs. And then just this week, the State of California signed a new law that allows people to buy and sell ADUs like condos.
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