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Homeowners Get Lending Boost From Rental Units On Property

Homeowners are now eligible to receive a major lending boost on accessory units on their property that they rent out. The US Department of Housing and Urban Development announced this week that lenders can count 75% of their garage apartments, in-law suites, and tiny homes as qualifying income when they underwrite a mortgage backed by the Federal Housing Administration.

What’s more, the new legislation allows 50% of the accessory unit’s rental income for a to-be-built ADU to qualify for a mortgage under the FHA’s renovation home loan. “With our new ADU policy, we’ll help households of more modest means maximize the potential benefits of homeownership to build wealth,” Julia Gordon, assistant secretary for housing announced. “This new policy also contributes to the supply of affordable housing in many neighborhoods where it’s most needed and least available.”

The new provisions are aimed at expanding financing options for new buyers and existing homeowners, and as a result, increasing market activity. This is being done to ease the national housing shortage crisis.

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