Official: New ADU Policy Will Boost Supply Of Affordable Housing


A new policy that allows lenders to count income from accessory dwelling units when underwriting a mortgage will help provide affordable homes for those who need them most, according to a top housing official.

Julia Gordon, who serves as the assistant secretary for housing and federal housing commissioner at the U.S. Department of Housing and Urban Development, spoke about the changes last week during her remarks at the Mortgage Bankers Association’s annual convention and expo in Philadelphia.

“We’re going to allow both existing rental income for ADUs, and prospective rental income, to be included in the underwriting process to allow more borrowers to purchase properties with ADUs, to rehab existing houses to add ADUs, and to construct new homes with ADUs,” Gordon said.

Gordon said this will not only help more people qualify for homeownership, “it also helps to boost the supply of affordable housing in many of the neighborhoods where it’s most needed and least available.”

A press release outlining the new policy states the Federal Housing Administration defines an ADU as a single habitable living unit with a means of separate ingress and egress that meets the minimum requirements for a living unit. It is a private space that is subordinate in size and can be added to, created within, or detached from a primary one-unit single-family dwelling.

During a question and answer session, Gordon said officials are trying to do what they can despite market challenges.

“This is a tough market. There’s no way around that. We got used to, I’ll call them, unusually low rates for a very long time. So even though the rate environment we’re in now, if you look back over the sweep of time, it doesn’t really look that remarkable, to us it feels that remarkable, and to potential homebuyers it feels that remarkable,” Gordon said.

She said leaders are thinking about how to reach new communities that haven’t taken advantage of homeownership before.

Leaders at AARP, formerly the American Association of Retired Persons, applaud the new ADU policy.

They say that ADUs can provide housing for an older relative or a caregiver.

AARP has been actively lobbying around the country, asking state and local lawmakers to lift zoning regulations and other barriers to ADUs, according to a blog post published on Monday.

“This year, AARP’s advocacy efforts helped pass state laws that will increase access to ADUs in Montana, Idaho, and Washington state. We also successfully fought back against a proposed delay of an ADU law we helped pass in Maine in 2022,” the post by writer Natalie Missakian says.

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