Having an accessory dwelling unit (ADU) on an existing property has become a popular way for homeowners to offer independent living space to family members or to gain residual income by renting out the unit. This popularity has increased demand for home financing that offers special consideration for an ADU.

Freddie Mac’s ADU policies provide multiple options for adding an ADU to a home or financing a purchase with the intention to rent or build an ADU, including allowing the borrower to use rental income to qualify. Our policies allow you to offer ADU flexibility on any Freddie Mac mortgage, giving your customers more choice in the purchase or renovation financing process.

Key Borrower Benefits

  • An ADU can allow homeowners to offer independent living space to parents, adult children or other family members for less than if they supported a separate living situation.
  • Residual income from renting out an ADU can contribute to mortgage payments and property maintenance to help sustain homeownership.
  • ADUs are usually smaller and more affordable to build than standalone residential properties and have the potential to increase property value in an amount much greater than their cost.
  • ADUs typically have a smaller environmental footprint—they require fewer materials to build and less energy to heat and cool, and they conserve land since they’re built on a lot with an existing property.

Key Lender Benefits

  • Our expanded ADU policy supports all Freddie Mac mortgage products and is not limited to our affordable offerings.
  • Strong market demand can be met by offering borrowers more financing options on their purchase or renovation of properties with ADUs.
  • With the use of Freddie Mac’s CHOICERenovation mortgage, a homeowner can renovate their existing residence to add an ADU or make an ADU renovation part of their home purchase transaction.
  • Financing ADU additions opens another business channel as refinancing slows.