Mortgage Lenders Can Now Count Income from ADUs When Underwriting FHA Loans
October 16, 2023
Source: Mortgage Orb
Mortgage lenders can now count income from accessory dwellings when underwriting Federal Housing Administration (FHA) loans.
The new policy aims to “help households of more modest means maximize the potential benefits of homeownership to build wealth,” says Julia Gordon, assistant secretary for housing and federal housing commissioner for the U.S. Department of Housing and Urban Development, in a statement. “This new policy also contributes to the supply of affordable housing in many neighborhoods where it’s most needed and least available.”
The new rule allows lenders to count income from small units of housing built inside, attached to, or on the same property as a primary residence.
By allowing the inclusion of rental income from the accessory dwelling unit (ADU) in the borrower’s qualifying income, more borrowers will be able to qualify for FHA financing.
The new rule – which supports the Biden-Harris Administration’s Housing Supply Action Plan – will also help incentivize more homeowners to provide more private rental housing.
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