Looking to finance an ADU?
More help may be on the way, and ModBox Builders is at the forefront of this exciting development. The Federal Housing Administration has proposed several changes to its guidelines that could make it easier to buy a house with an accessory dwelling unit or to build an ADU. This proposal has the potential to increase the housing supply and help families build wealth.
The agency’s proposal would allow lenders to offer renovation loans to build ADUs and consider future rent from the unit when calculating how much a customer can afford to borrow. Under current rules for FHA-backed loans, lenders can consider rental income from duplexes but not ADUs. The proposal would address one of the main barriers that people with little home equity and low to moderate incomes encounter when they try to get a loan for an ADU.
This is a huge step in helping us actually build ADUs
The ability to include future rents could make a big difference, increasing borrowers’ income and making it more likely that they’ll be able to borrow enough money to build an ADU, which can easily cost $150,000 to $200,000.
FHA Commissioner Julia R. Gordon said the agency is trying to advance two important goals with the proposal: enabling more people to own homes that include income-generating property, as the FHA does for duplexes, and increasing the housing supply. The proposal is just a draft at this point, though, and it could change in response to public input.
The lack of historical data about ADUs and the value they add to a property has made them a challenge for the FHA, Fannie, and Freddie. “It’s a little bit of a chicken-and-egg problem,” she said — there’s not enough data for lenders to figure out how to underwrite the projects, but without the loans, there’s no way to generate more data.
ADU construction has taken off nationwide
However, this type of project is starting to be a national phenomenon as more communities grapple with shortages of affordable housing and the need to increase density. Building an ADU is an excellent way to provide additional living space, generate rental income, or create a home office.
ModBox Builders is a leader in the field of shipping container ADU construction. Our innovative approach to design and construction has been recognized in numerous publications, including Dwell and Architectural Digest. We specialize in creating beautiful, functional, and eco-friendly ADUs that can be customized to suit your specific needs.
Our team of experienced designers and builders can guide you through every step of the process, from selecting the perfect site to designing the perfect layout. We can help you navigate the financing process and take advantage of the latest developments in financing ADUs. We work with a variety of lenders to offer a range of financing options, including FHA-backed loans.
At ModBox Builders, we believe that ADUs represent the future of housing. Our focus on sustainability, affordability, and functionality has made us a leader in this exciting field. We invite you to explore our website and learn more about how we can help you build the ADU of your dreams. With the FHA’s proposed changes, now is the perfect time to invest in your future and build an ADU that can provide a lifetime of benefits.
