Accessory dwelling units (ADUs) are in the spotlight after the Biden Administration announced steps to address the housing shortage. The Housing Supply Action Plan aims to ease housing costs by increasing quality housing in every community. The plan outlines legislative and administrative actions to close the housing supply gap within five years. It starts with creating and preserving hundreds of thousands of affordable housing units over the next three years.
The statement highlighted that state and local reforms, along with better financing, could lead to over 1 million ADUs nationwide in five years. The President’s plan aims to ease financing for ADU projects, offering more housing options. ADU builds can provide a more affordable option for lower-income individuals
Specifically, the Housing Supply Action Plan mentions new financing mechanisms to build and preserve more housing, including ADUs. The FHA and FHFA are exploring ways to help lenders finance ADUs for low- and moderate-income homeowners. They are also considering new financing options for other renovations and 2-4-unit rehabs. The FHA and FHFA will evaluate loan performance to improve and expand affordable financing options.
As of June 2022, Freddie Mac is now offering a program for 1-3 unit properties that have an ADU. A refinance is possible factoring in the rental income from the ADU; there is no seasoning period required, meaning you can initiate the refinance as soon as you have a rental contract signed.
The President’s upcoming budget includes a $25 billion grant to support ADU builds, multigenerational property development, and local housing efforts. Though action isn’t needed immediately, homeowners should stay informed as these programs develop.
And indirectly, increased awareness of ADUs may also boost appraisal values as they become more common in homes for sale.
Read more about ADU Financing options.
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