ADU Loan Requirements in 2026: Credit, Equity, Permits, and Program-by-Program Rules

ADU loan requirements at a glance (May 2026)

Sources & verification dates in the Sources block.

What we verified for this guide

What are the five approval gates for an ADU loan?

An ADU loan is approved or denied on five things at once: you (borrower), the property, the ADU itself, the project plan, and the appraisal or rental analysis that supports value and income. Different loan paths weight these gates differently, but no path skips them.

Equity-based products (HELOC, home equity loan, cash-out refinance) live or die on the property's current value. Future-value products (construction-to-permanent, HomeStyle, CHOICERenovation, FHA 203(k)) live or die on the as-completed appraisal and the project package supporting it. A loan officer's first 15 questions are almost always pre-screening which gate is going to be the hardest one for your file. If you know the answer before you call, you save weeks.

Gate 1 — Borrower.

Credit score, debt-to-income ratio (DTI = monthly debt payments ÷ gross monthly income), income stability, employment history, assets, reserves, and any prior derogatory events (foreclosure, short sale, bankruptcy, late payments).

Gate 2 — Property.

Title, liens, occupancy plan, property type, insurance, and zoning. The ADU has to be on a lot that legally allows one — or that can be legalized — under your jurisdiction's rules.

Gate 3 — ADU legality.

The ADU must be legal, legal nonconforming ("grandfathered"), or in a no-zoning jurisdiction. Freddie Mac has a narrow exception path for illegal-zoning ADUs on 1-unit subject properties; most other programs do not.³ An illegal ADU usually has to be legalized before financing.

Gate 4 — Project plan.

Required when the loan funds construction or renovation. Plans, scope of work, line-item budget, signed construction contract, contractor's license and insurance, permit status, draw schedule, and contingency reserve. The CFPB describes construction loans as short-term loans funded "in advances as work progresses,"¹² which is why the project package matters as much as your W-2s.

Gate 5 — Appraisal & rental analysis.

Equity-based products need a current-value appraisal that supports your CLTV. Future-value products need an as-completed appraisal. If you're counting on ADU rent to qualify, the appraisal must include market-rent analysis — and for Freddie Mac — at least one comparable sale with an ADU plus at least three comparable rentals, one of them with a rented ADU.³

Credit score, DTI, and reserves — what lenders actually test

No single credit score is "the ADU loan requirement." FHA 203(k) accepts as low as 500 with 10% down or 580 with 3.5% down; HomeStyle and CHOICERenovation no longer carry a published agency floor on automated-underwriting paths as of November 16, 2025, though most lenders still overlay 620; HELOCs typically require 680–720 for the best pricing; the most competitive pricing across products usually opens at 740+.

Credit score thresholds: agency rule vs. lender overlay

A lender overlay is a stricter rule the lender adds on top of the program rule. Even though Fannie and Freddie dropped published score floors on automated paths, retail lenders broadly continue to apply at least a 620 floor in practice on conventional ADU files.

DTI ceilings by program

• HomeStyle Renovation: Up to 50% via Desktop Underwriter (DU).
• CHOICERenovation: 45% typical; LPA decisions vary.
• FHA 203(k): 31% front-end / 43% back-end standard; up to 47/57 with documented compensating factors.¹³
• HELOC and home equity loan: 43% standard; some lenders flex to 50% with strong credit and income.
• VA: 41% benchmark plus residual income test (which can let you exceed 41%).
• USDA SFHGLP: 41%.

A common DTI mistake: forgetting to include the new loan's projected payment in the math. For a HomeStyle or 203(k), it's the new full PITIA (principal, interest, taxes, insurance, association dues). If you're at 42% today and the new loan adds another 4% of debt to income, you're over the line for everything but FHA with compensating factors.

Reserves and assets

• Conventional renovation (HomeStyle / CHOICERenovation): 2–6 months PITIA, depending on automated-underwriting findings and number of financed properties.
• FHA 203(k): 1 month PITIA for 1–2 unit; 3 months PITIA for 3–4 unit. If FHA ADU rental income is used to qualify on a 1-unit with ADU, HUD requires reserves equivalent to at least 2 months of PITI after closing.⁴
• HELOC and home equity loan: Lender-specific; many require 2 months PITIA.
• Construction-to-permanent: Typically 6+ months PITIA, plus the 10–15% contingency reserve required for two-to-four-unit HomeStyle files.⁸

If your ADU project will require you to live elsewhere during construction, your reserves also need to support the alternate housing cost.

How much equity (or future value) do you actually need?

The right question isn't "what's the down payment?" — it's "what value am I borrowing against?" Equity products lend against your home's current value at 80–85% combined loan-to-value. Future-value products (construction, HomeStyle, CHOICERenovation, 203(k)) lend against the home's as-completed value, typically capped at 95–110% of that future appraisal, with down payments as low as 3% on conventional and 3.5% on FHA.

Current-value lending: HELOC, home equity loan, cash-out refinance

Most lenders require CLTV at 85% or less for a HELOC.¹⁴

Worked example. Your home appraises at $700,000. Your first mortgage balance is $400,000. Usable HELOC limit is $160,000 at 80% CLTV. If your ADU is going to cost $300,000 to build, current equity at this property doesn't cover it on a first-or-second-position equity product. You either pivot to a future-value loan, contribute personal cash, or stage the build.

Future-value lending: construction-to-permanent, HomeStyle, CHOICERenovation, FHA 203(k)

These products are scored against the appraised value after the ADU is built.

• Fannie Mae HomeStyle Renovation: Eligible renovation funds capped at 75% of the lesser of (purchase price + renovation cost) or the as-completed appraised value for purchases; 75% of as-completed appraised value for refinances. For manufactured homes, renovation costs are limited to 50% of the as-completed appraised value (the prior $50,000 cap was removed in SEL-2025-10).^8·19 LTV up to 97% on a 1-unit primary residence. Renovation work must be completed within 15 months of closing.⁸
• Freddie Mac CHOICERenovation: Comparable structure; up to 97% LTV on 1-unit primary; new specificity on qualifying rental income for CHOICERenovation applications received on or after May 4, 2026 per Bulletin 2026-1.¹⁵
• FHA 203(k) Standard: Loan amount limited to lesser of (purchase + reno) or 110% of as-completed value, subject to FHA county loan limits. 2026 FHA limits range from $541,287 in low-cost counties to $1,249,125 in high-cost counties for single-family.¹³
• FHA 203(k) Limited: Cap raised to $75,000 in renovation funds (effective for FHA case numbers assigned on or after November 4, 2024); completion within 9 months; HUD consultant not required.⁹

For new-construction ADUs financed under construction-to-permanent, Fannie Mae allows a construction period not to exceed 12 months in a single phase and not to exceed 18 months total across phases.¹⁶

The qualification matrix — by program

The eight ADU financing paths each have their own credit, DTI, equity/LTV, occupancy, documentation, ADU-specific overlay, and rental-income rule. The matrix below is assembled from primary-source documentation. Use it as a shortlist tool, not a substitute for an underwriter.

Fannie Mae HomeStyle Renovation

Plain-English decoder of the 75% cap. If you're buying a $400,000 fixer with $200,000 in renovations and the as-completed appraisal values the property at $640,000, your eligible renovation funds are capped at 75% of $600,000 (lesser of purchase+reno or as-completed) = $450,000 — well above your $200,000 budget, so the cap won't bite. The cap prevents renovations bigger than the property can support.

Freddie Mac CHOICERenovation

FHA 203(k) Standard

FHA 203(k) Limited

Decoder. For most ground-up detached ADU builds, 203(k) Limited won't fit — the scope rules out structural work and major additions. Limited is best for a finished interior remodel paired with a cosmetic garage conversion where the conversion itself doesn't trigger structural work. Standard 203(k) is the right fit for major rehab + ADU addition.

HELOC (home equity line of credit)

May 2026 rate snapshot (not an offer; subject to borrower/lender/property terms). As of May 12, 2026, the national average was 7.21% on HELOCs and 7.36% on fixed home equity loans per Curinos data via Yahoo Finance.¹¹ Variances of 200–300 basis points across lenders for the same applicant are common. Shop at least three lenders.

Home equity loan (fixed-rate second mortgage)

Cash-out refinance

Construction-to-permanent loan

VA construction or renovation

USDA Single Family Housing Guaranteed Loan Program

Practical answer for May 2026: USDA currently blocks income-producing ADUs. Multigenerational (family) ADUs are allowed. Watch for the final rule before banking on USDA for a rental ADU.

Can ADU rental income help you qualify for a loan?

Yes, under specific conditions — and this is the most consequential change in ADU lending in years. As of March 21, 2026 (Desktop Underwriter® version 12.1), Fannie Mae allows up to 30% of qualifying income to come from one ADU's rental income on a 1-unit principal residence (purchase or limited cash-out refinance only).¹ Freddie Mac allows 75% of lease, capped at 30% of total qualifying.³ FHA allows 75% on existing ADUs or 50% on a new ADU added under a 203(k), capped at 30% of total monthly effective income.⁴ VA generally does not count ADU rental income for qualifying. USDA's current rule blocks income-producing ADUs; the proposed rule (RHS-26-SFH-0100) would change that.⁶

Side-by-side: the three big rule-sets

Why your expected ADU rent may not count at all

The rent you expect from the ADU is not automatically lender-usable income. If any of these is true, it may be ignored or reduced:

• The ADU is not legally rentable in your jurisdiction.
• The ADU is illegal-zoning (not legal nonconforming) — Freddie has a narrow exception, others don't.³
• The appraisal cannot find ADU rental comps in your market.
• The transaction type isn't eligible (Fannie cash-out refi; FHA cash-out refi).²
• The program caps the income (the 30% rule applies even when the rent could be much higher).
• You're using a VA loan (generally not counted).⁵
• You're using a USDA loan (currently blocked by 7 CFR 3555 pending final rule).⁶

The ADU loan documentation checklist — what each loan type actually requires

Documentation falls into three buckets: about you, about the property, and about the project. Equity loans (HELOC, home equity loan) need primarily the first two. Construction and renovation loans (HomeStyle, CHOICERenovation, FHA 203(k), construction-to-permanent) add a project package of 8–12 additional documents. If you're using ADU rental income to qualify, add another 4–5 items.

Universal stack — about you (always required)

1. Government-issued photo ID
2. Social Security number
3. Two most recent pay stubs
4. W-2s for the past 2 years
5. Federal tax returns for the past 1–2 years (2 years if self-employed)
6. Two months of bank statements for all accounts
7. Two-year residential history
8. Two-year employment history (gaps explained)
9. Documentation of any non-W-2 income (pensions, Social Security, child support, existing rental income)
10. Credit authorization
11. Statements for any other liabilities or properties

About the property

12. Current homeowners insurance declarations page
13. Most recent property tax bill
14. Current mortgage statement(s)
15. Legal description / title commitment
16. HOA documentation, if applicable

About the project (renovation, construction, future-value loans)

17. Signed construction contract with contractor
18. Detailed scope of work and line-item budget
19. Contractor's license, insurance, references
20. Stamped architectural plans + elevations
21. Site plan
22. Local building permit (or proof permits are in process)
23. Project timeline with milestones tied to draws
24. Contingency reserve calculation (typically 10–15%)
25. Plans for utility connections (sewer/septic/water/electric)

When ADU rental income is used to qualify

26. Existing lease (signed, dated, in U.S. dollars)
27. Appraisal with Form 1007 / Form 1025 (UAD 2.6) or UAD 3.6 Rental Information section + Rental Comparison Grid²²
28. Rental history (12 months of cancelled checks or bank deposits) if existing rental
29. Schedule E from federal tax returns (if previously declared rental income)
30. For Freddie Mac CHOICERenovation purchase + rental-income use: proof of landlord education completion OR documentation of ≥1 year management history

Additional for FHA 203(k) Standard

31. HUD consultant write-up (Specification of Repairs)
32. Energy or structural reports as required by the lender
33. Termite report (in most states)

Will your ADU itself qualify? Zoning, permits, appraisal, and the illegal-ADU trap

Your personal qualifications are only half the test. The ADU must clear three gates of its own: zoning compliance (legal, legal nonconforming, or in a no-zoning jurisdiction), a structural definition that meets the program's ADU rules (independent living, sleeping, cooking, and bathroom facilities with separate ingress/egress), and an appraisal that finds at least one comparable sale with an ADU within a reasonable distance. The illegal-ADU question is the single most common dealbreaker.

Zoning compliance — the four categories

• Legal ADU. Built with a permit, complies with current zoning. ✅ All programs accept.
• Legal nonconforming ("grandfathered") ADU. Built legally under prior rules; protected. ✅ All programs accept.
• No-zoning jurisdiction. Some rural areas. ✅ Freddie Mac explicitly allows.³ Verify the others.
• Illegal ADU. No permit or in violation of current rules. ❌ Fannie, FHA, VA, USDA reject. Freddie Mac has a narrow exception path on 1-unit subject properties in specific cases.³

If you inherited or bought a property with an "unpermitted in-law unit," pull the building department records before you call a lender. California's AB 2533 — signed September 28, 2024, effective January 1, 2025 — creates a statewide amnesty for unpermitted ADUs and JADUs built before January 1, 2020, subject to Health and Safety Code §17920.3 substandard-housing limits.²¹ See our California ADU laws guide →

The ADU structural definition by program

Fannie Mae defines an ADU as a smaller additional living space on the same lot as a single-family home that includes "space for living, sleeping, cooking and bathrooms independent of the primary residence," accessible without going through the primary residence, with some expectation of privacy.¹⁷

The appraisal problem nobody warns you about

When ADU rental income is being used to qualify, the appraiser must find a comparable sale with an ADU, and — for Freddie Mac — at least three comparable rentals with at least one rented ADU.³ In high-ADU markets (much of California, Portland, Seattle, Denver), this is workable. In markets with few documented ADU sales, the appraiser can fail to find comps, and your loan goes from approved to suspended mid-process.

Mitigation: ask your lender three questions upfront — (1) does your appraisal panel include ADU-experienced appraisers in this zip code; (2) what's the recent ADU comp count; (3) what's the rebuttal process if the as-completed value comes in low? If they can't answer, you're shopping the wrong lender for an ADU file.

The 75% vacancy haircut

When you submit a lease or market-rent estimate, Freddie Mac and FHA's appraisal-based paths apply a 25% vacancy/expense haircut — meaning they count 75% of the rent. A $2,000/month lease counts as $1,500/month for DTI math, then is further capped at 30% of total qualifying. This isn't a lender's choice; it's program-baked.

Which ADU loan requirements change by project type?

Detached ADUs, garage conversions, attached additions, prefab/modular ADUs, manufactured-home ADUs, basement ADUs, and Junior ADUs (JADUs) trigger different requirements around appraisal, zoning, building code, and program eligibility. The path that's cheapest on a detached ADU may not be available for a JADU at all, and vice versa.

For detailed cost ranges by ADU type and market, see our ADU cost per square foot guide and how much does an ADU cost? — the requirements section here focuses on what changes for the loan, not the build.

Special cases: VA loans, USDA's pending rule, manufactured-home ADUs, JADUs, investment property

VA loans and ADUs

Eligible veterans can use VA financing to buy or refinance a property with an ADU and rent the unit not used as their primary residence. Mechanics in practice:

• $0 down for entitlement-eligible borrowers.
• Occupancy of the property as a primary residence is required.⁵
• ADU rental income from the subject property generally doesn't count for qualifying on a VA loan; confirm with your VA-experienced lender.⁵
• VA construction loans technically exist; very few lenders offer them.

The most common VA + ADU pattern: buy with VA financing, occupy for the required period, then use a HELOC or other equity product to fund the ADU.

USDA's proposed rule (RHS-26-SFH-0100)

The USDA's Single Family Housing Guaranteed Loan Program is in the middle of rulemaking that, if finalized, would change ADU treatment substantially. The proposed rule:

• Amends 7 CFR 3555.102(b) and 7 CFR 3555.201(b)(2) to permit financing of single-family homes with single or multiple income-producing ADUs.⁶
• Was published in the Federal Register March 31, 2026; comments must be received by June 1, 2026. The final rule has not been published as of May 20, 2026.

Manufactured-home ADUs

• Fannie Mae HomeStyle (UAD 2.6): MH ADU allowed when the primary residence is stick-built. The MH ADU must be classified as real property after installation per Selling Guide B5-2-05.⁸
• Fannie Mae HomeStyle (UAD 3.6 lenders, effective March 31, 2026): Standard MH primaries may include one real-property ADU; MH Advantage primaries may include multiple ADUs up to four total dwellings.¹⁹
• Freddie Mac (Bulletin 2025-15): Allows the primary dwelling to be a multiwide manufactured home (including a CHOICEHome) with an MH ADU, effective February 9, 2026.²⁵

Junior ADUs (JADUs) — financing tips

JADUs are usually the cheapest ADU to permit and build because they reuse existing walls and foundation. Most JADU files close on a HELOC or home equity loan because the scope is small enough to fit comfortably within current equity. For HomeStyle Renovation or 203(k), confirm the JADU meets the full ADU structural test before counting on its rental income.

Investment property ADUs

• Fannie Mae's March 2026 rule applies only to 1-unit primary residences. Investment properties with ADUs are not eligible for the new 30%-of-qualifying-income rule.¹
• Freddie Mac is more permissive — ADU rental income may be considered on investment properties under Guide Chapter 5306.³
• FHA generally requires owner-occupancy.

Lender overlays: the gap between agency rules and reality

A lender overlay is a stricter requirement the lender adds on top of the program rule. Even though Fannie and Freddie removed published score floors on their automated paths, retail lenders broadly continue to require at least 620 conventional on a HomeStyle / CHOICERenovation file in practice. Even though FHA permits 500 with 10% down, most lenders won't go below 580. Knowing what overlays your lender uses — before you apply — is the single fastest way to avoid a wasted month.

Common ADU-specific overlays

Three questions that flush out overlays before you apply

1. "What's your minimum FICO for a HomeStyle Renovation (or CHOICERenovation, or 203(k)) with an ADU?"
2. "Do you have ADU-type or zip-code overlays in [your market]?"
3. "What's the appraisal panel's experience with ADU comparable sales here?"

Get the answers by email. Shop three lenders before submitting any hard credit pull.

Why ADU loan applications get delayed or denied

ADU financing is genuinely harder than financing a primary residence. Renovation loans add a contractor-coordination layer most borrowers underestimate. Construction loans are draw-managed. Appraisals can fail in markets without ADU comps. These aren't reasons to abandon the project — they're reasons to plan. Most homeowners who close on ADU financing work through at least one of these issues during the process.

If any of these is your situation, the right next step usually isn't to apply for a different loan — it's to fix the underlying issue. Most can be solved in 30–90 days.

How long does ADU loan approval take?

Equity loans are usually faster than construction and renovation loans. Exact timing depends on borrower-document completeness, permit and design stage, contractor readiness, appraisal scheduling, rent-comparable availability, draw administrator setup, and title/lien review. The ranges below are editorial planning estimates assembled from current lender-published timelines reviewed May 2026; your jurisdiction can add or remove weeks.

These are not guarantees. Permits, appraisal scheduling, contractor readiness, and lender backlog can each add 2–6 weeks.

The 30-day pre-application protocol

The fastest-approved borrowers usually spend the 30 days before application doing five things. Use it as a checklist.

Frequently asked questions

What credit score do I need for an ADU loan?

It depends on the program. FHA 203(k) accepts as low as 500 with 10% down or 580 with 3.5% down. Conventional renovation loans on automated underwriting (HomeStyle DU, CHOICERenovation LPA Accept) no longer carry a published agency floor as of November 16, 2025, but manually underwritten conventional loans still carry the 620 minimum and most lenders still overlay 620 in practice. Home equity loans typically require 620; HELOCs typically require 680–720 for the best pricing. Best pricing across nearly all products opens at 740+.

How much equity do I need to finance an ADU?

For HELOCs and home equity loans, you typically need at least 15–20% equity remaining after the new loan (CLTV at 80–85%). For future-value loans (HomeStyle, CHOICERenovation, 203(k), construction-to-permanent), the loan size is governed by the post-completion appraisal, with HomeStyle eligible renovation funds capped at 75% of the lesser of (purchase + reno) or as-completed value.

Can I get an ADU loan with no equity?

Yes, if you can support the loan against the future value of the home after the ADU is built. Construction-to-permanent loans, Fannie Mae HomeStyle Renovation, Freddie Mac CHOICERenovation, and FHA 203(k) all use as-completed value. They require more documentation (plans, bids, permits, draw schedules) than equity products.

Can projected ADU rental income help me qualify?

Often, yes. As of March 21, 2026, Fannie Mae's DU 12.1 allows up to 30% of qualifying income from one ADU's rental income on a 1-unit primary residence (purchase or limited cash-out refinance only). Freddie Mac allows 75% of lease, also capped at 30% of total qualifying. FHA allows 75% on existing ADUs or 50% on a new ADU under a 203(k). VA generally does not count ADU rental income; USDA's current rule blocks income-producing ADUs entirely.

Do I need permits before applying for an ADU loan?

For HELOCs and home equity loans secured against the existing home, no — but you'll need them before construction starts. For renovation and construction loans, your lender will want either issued permits or evidence the permit application is in process before disbursing construction draws. Local rules vary.

Do lenders require a licensed contractor?

For HomeStyle Renovation, CHOICERenovation, FHA 203(k), and construction-to-permanent loans, yes. Fannie Mae HomeStyle allows limited DIY on 1-unit owner-occupied homes (capped at 10% of as-completed value, with lender inspections for items over $5,000). Manufactured homes are not eligible for DIY.

Can I use an FHA 203(k) loan for an ADU?

Yes. HUD Mortgagee Letter 2023-17 recognizes ADUs as eligible improvements under Standard 203(k), including adding an attached ADU to the existing structure and renovating an existing ADU. Limited 203(k) is for minor remodeling and nonstructural repairs up to $75,000 with a 9-month timeline; major or structural ADU work requires Standard 203(k).

Can a HELOC be used to build an ADU?

Yes, if you have enough current equity. Most lenders cap CLTV at 80–85% of current value. Some California credit unions offer ADU-specific HELOCs. HELOCs use the home as collateral, are typically variable-rate (tied to Prime), and can be frozen or reduced if home value or finances change.

Does a prefab ADU qualify for financing?

It depends on classification and program. Prefab ADUs that are permanently affixed and titled as real property are widely financeable. Manufactured-home ADUs have program-specific rules — Fannie Mae HomeStyle Renovation caps manufactured-home renovation costs at 50% of as-completed value under SEL-2025-10 (the prior $50,000 dollar cap was removed); Freddie Mac allows MH ADU on multiwide MH primaries per Bulletin 2025-15.

What if my ADU is legal nonconforming?

Legal nonconforming ("grandfathered") ADUs are accepted by Fannie Mae, Freddie Mac, and FHA. Confirm with your VA-experienced lender for VA files.

Can a HELOC be frozen during my ADU build?

The CFPB notes HELOCs can be frozen or reduced if the lender determines the home value has dropped significantly or the borrower's financial circumstances have changed. This is one reason borrowers on lengthy ADU projects sometimes prefer construction-to-permanent or HomeStyle Renovation financing, which lock in the loan amount upfront.

Can an illegal or unpermitted ADU be financed?

Generally no. Fannie Mae, FHA, VA, and USDA require zoning compliance (legal or legal nonconforming). Freddie Mac has a narrow exception path for an illegal ADU on a 1-unit subject property in specific cases. The practical path is legalization first, financing second. In California, AB 2533 creates a statewide amnesty path for unpermitted ADUs and JADUs built before January 1, 2020.

Will an ADU loan replace my current mortgage?

HELOCs and home equity loans sit as a second lien and keep the first mortgage intact. Cash-out refinances and renovation loans (HomeStyle, CHOICERenovation, 203(k)) replace the first mortgage. Construction-to-permanent typically replaces the existing mortgage at completion.

What happens if the appraisal doesn't support the ADU value or rent?

This is one of the most common loan-stage failures. For future-value loans, a low as-completed appraisal shrinks the loan ceiling. For HELOCs, a low current-value appraisal drops the credit line. Options: renegotiate scope, contribute more equity, or pursue an appraisal rebuttal. Ask your lender about rebuttal procedures before signing.

Sources

1. Pennymac Correspondent, Announcement 26-29 / 26-25: Fannie Mae Updates to Accessory Dwelling Unit (ADU) Rental Income, March 23, 2026 — confirming DU 12.1 effective March 21, 2026 and 30% qualifying-income cap. Verified May 20, 2026. corr.pennymac.com | Primary source: Fannie Mae Selling Guide B3-3.1-08. fanniemae.com
2. HUD Mortgagee Letter 2023-17, Revisions to Rental Income Policies, Property Eligibility… (FHA cash-out ADU effective-income restriction). Verified May 20, 2026. hud.gov
3. Freddie Mac, Accessory Dwelling Units Fact Sheet, February 2026. Verified May 20, 2026. freddiemac.com
4. HUD Mortgagee Letter 2023-17 (FHA ADU rental income at 75% existing / 50% new under 203(k); URAR/Form 1007 documentation; 2-month PITI reserve requirement on 1-unit + ADU when ADU income is used). Verified May 20, 2026.
5. U.S. Department of Veterans Affairs, VA Lenders Handbook (occupancy and rental income guidance). Verified May 20, 2026.
6. Federal Register, Single Family Housing Guaranteed Loan Program — Income Producing Accessory Dwelling Unit Provisions (proposed rule), Docket RHS-26-SFH-0100, published March 31, 2026; comments must be received by June 1, 2026. Verified May 20, 2026. federalregister.gov
7. Fannie Mae Selling Guide Announcement SEL-2025-09 (effective for new DU casefiles created on or after November 16, 2025 — 620 representative-credit-score minimum removed from DU). Verified May 20, 2026. fanniemae.com
8. Fannie Mae, HomeStyle Renovation Mortgages Selling Guide B5-3.2-01 and HomeStyle Renovation FAQs. Verified May 20, 2026. fanniemae.com
9. Diamond Residential Mortgage, HUD Announces Changes To Its FHA 203(k) Program (Nov 4, 2024 changes — Limited cap raised to $75,000; Limited completion 9 months; Standard completion 12 months). Verified May 20, 2026. diamondresidential.com
10. Freddie Mac, Primary Mortgage Market Survey — 30-year fixed averaged 6.36% as of May 14, 2026 (dated snapshot, not an offer). Verified May 20, 2026. freddiemac.com
11. Yahoo Finance / Curinos, HELOC and home equity loan rates today, May 12, 2026 (national averages 7.21% HELOC / 7.36% HEL — dated snapshot, not an offer). Verified May 20, 2026. finance.yahoo.com
12. Consumer Financial Protection Bureau, What is a home equity line of credit? and What is a construction loan? Verified May 20, 2026. consumerfinance.gov
13. The Mortgage Reports, FHA 203(k) Loan Requirements & Guide 2026. Verified May 20, 2026. themortgagereports.com
14. Bank of America, How to Calculate Home Equity (CLTV definition and most-lenders 85% CLTV cap for HELOCs). Verified May 20, 2026. bankofamerica.com
15. TENA Companies, Freddie Mac Issues Bulletin 2026-1 (new specificity for qualifying rental income on CHOICERenovation effective May 4, 2026). Verified May 20, 2026. tenaco.com
16. Fannie Mae Selling Guide B5-3.1-02, Conversion of Construction-to-Permanent Financing: Single-Closing Transactions. Verified May 20, 2026. fanniemae.com
17. Fannie Mae, Accessory Dwelling Units (ADUs) product page. Verified May 20, 2026. fanniemae.com
18. HUD, Single Family Housing Policy Handbook 4000.1 and 203(k) Rehabilitation Mortgage Insurance Program. Verified May 20, 2026. hud.gov
19. Fannie Mae Selling Guide Announcement SEL-2025-10 and UAD 3.6 Policy Supplement — expanded ADU and MH eligibility effective March 31, 2026 for lenders using UAD 3.6. Verified May 20, 2026. fanniemae.com
20. WISA Solutions, Does the FHA Allow Rental Income From an ADU in 2026? (30% cap on ADU income for FHA qualifying). Cross-referenced with HUD ML 2023-17. Verified May 20, 2026. wisadc.com
21. California Assembly Bill 2533 — signed September 28, 2024; effective January 1, 2025; applies to unpermitted ADUs and JADUs built before January 1, 2020. Verified May 20, 2026. colma.ca.gov
22. Fannie Mae Appraiser Update — UAD 2.6 vs UAD 3.6 reporting requirements for ADU rental income (Form 1007 on UAD 2.6; Rental Information section / Rental Comparison Grid on UAD 3.6). Verified May 20, 2026. fanniemae.com
23. LendEDU, HELOC and Home Equity Loan Qualification Requirements: 2026 Guide. Verified May 20, 2026. lendedu.com
24. Fannie Mae Selling Guide B3-3.1-08, Rental Income — 75% calculation when using lease or market rent forms; subject-property ADU income cap at 30% of total qualifying. Verified May 20, 2026. fanniemae.com
25. TENA Companies, Freddie Mac Issues Bulletin 2025-15: Selling Updates (multiwide MH primary + MH ADU effective Feb 9, 2026). Verified May 20, 2026. tenaco.com
26. NYC Housing Preservation & Development, Plus One ADU Program Term Sheet. Verified May 20, 2026. nyc.gov

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