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  • Writer's picturePhil Evans

Now Homes with ADUs are More Affordable!

We have great news for clients who are hoping to rent out part of their primary residence to pay their mortgage! Fairway Mortgage is introducing new guidelines for clients looking to buy a new home with an auxiliary dwelling unit. Homebuyers can now use the rental income they would get from renting out the ADU or separate living unit to help them obtain the loan.

Finding a home with a space to rent out is a great option for added income through monthly or short-term rent. If you are wanting ta dedicated Air BnB rental but the homes you are finding are out of your price point, give Lori Means a call 503-577-5998 or email her for more information on this type of loan.

Here are some basic points on how it works:

Mortgages Secured by Properties with an ADU:

  • Property Eligibility Expansion:

    • Expanding eligibility to allow one ADU on 2-unit and 3-unit properties. Previously ADUs were only permitted on 1-unit dwellings. Note: 2-3 unit properties with ADUs must comply with zoning and land use requirements.

  • Rental Income for ADU 1-Unit Primary Residence:

    • Previously rental income from an ADU was only permitted on a subject 1-unit primary residence when the borrower had a disability and the rental income was from a live-in aide or when the mortgage was a Home Possible Mortgage. Going forward, rental income from an ADU will also be permitted on a 1-unit primary residence to qualify the borrower on a purchase or no cash-out refinance provided certain requirements are met, including but not limited to:

      • The appraisal must support the ADU's marketability including a minimum of one comparable sale with a rented ADU. Note: ACE appraisals are not permitted when using ADU rental income for qualification (LPA will be updated in the fall of 2022 with feedback messages excluding ACE waivers when ADU rental income is used).

      • The rental analysis must include at least three comparable rentals supporting the market rent of the ADU, one of which must be a property with an ADU.

      • Rental income from the ADU must not exceed 30% of the total monthly income.

At least one qualifying borrower must have no less than one year of landlord experience or participate in a landlord education program. Do you need more information? Write us an email at and we'll have a chat!

If you haven't taken a Home Buyers Class, you really should! It will empower you with all the knowledge you need to be a successful home buyer. Sign up for our next class here.


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