Accessory Dwelling Units (ADUs)
ADUs can add value to a borrower’s home, provide additional space for extended family, or allow a borrower to earn rental income, all while helping address the country’s affordable housing shortage. Any Selling Guide loan product can be used to purchase homes with ADUs or add an ADU to a borrower’s existing home.
What qualifies as an ADU?
An ADU, commonly referred to as an accessory apartment or secondary suite, is a smaller additional living space on the same lot as a single-family home. It has to include space for living, sleeping, cooking and bathrooms independent of the primary residence. While the ADU may or may not include access to the primary residence, it must be accessible without going through the primary residence and there must be some expectation of privacy from the home.
ADUs can be
- Within a primary residence, such as a basement apartment
- Attached to a primary residence, such as a living area over a garage
- Detached from the home entirely; It could even be a manufactured home
You can find additional requirements in our Selling Guide.
Help borrowers add, build, or buy an ADU with any Selling Guide product
Fannie Mae treats ADUs the same as any other home feature or improvement. They can be financed with any Selling Guide loan product, including standard purchase or refinance loans or affordable lending products. There is no specific type of financing required for a home with an ADU.
Some possible financing options for a borrower’s ADU home purchases or projects include:
Add an ADU to an existing property with HomeStyle® Renovation
Borrowers looking to purchase or refinance a 1-unit property and construct or install a new ADU can use a renovation loan to finance it.
Build a home with an ADU using Construction-to-Permanent Financing
Borrowers building a new 1-unit property with an ADU can use a Construction-to-Permanent loan to finance both the home and ADU construction.
Buy a home with an existing ADU using HomeReady®
Borrowers purchasing or refinancing a home with an existing ADU who qualify for a HomeReady loan can include rental income to help them qualify for the loan.
Note: ADUs are not eligible with a 2-4 unit dwelling, or when a manufactured home is the primary residence. Properties with multiple ADUs are also ineligible for Fannie Mae financing.