Rental income from ADUs now can be counted toward an FHA mortgage

Beginning this week, the FHA has adjusted its lending guidelines to encourage the use of accessory dwelling units as a means of increasing housing supply and affordability.

The FHA (Federal Housing Administration) is now opening its doors to ADUs, which are essentially accessory dwelling units – like a guest house or basement apartment. These ADUs can be a game-changer for both homeowners and those looking to invest in real estate.

You see, they’re making it possible for homeowners to use the income from these ADUs when applying for FHA loans. So, if you own one already or plan to build one using a 203(k) Rehab loan, you can include some of that expected rental income in your loan application.
Of course, there are some rules to follow. For existing ADUs, only 75% of the expected rental income counts in your debt/income ratio. If you’re building a new ADU with a 203(k) loan, you can use 50% of the expected rental income.

So, if you’re eyeing a home or thinking about adding an ADU to your property, this is a fantastic development to keep in mind. It’s all about making homeownership more achievable and helping you get the most out of your investment.