Is it time to move on from your cluttered co-op? Do you need to find a home with an extra unit for an elderly parent, or are you hoping to score a little rent income? If you answered “yes” to these questions, an accessory dwelling unit, also known as an ADU, is probably on your wish list as you search for a new home.

There’s just one problem: As you look at homes with accessory dwelling units, you might find that some of them weren’t constructed with the proper permits or aren’t “up to code.” What if you fall in love with a home that has an illegal ADU?

If this happens, all is not lost! At MortgageDepot, we offer financing for homes with illegal ADUs. Read on to learn more about how this can work for you.

What Is an Accessory Dwelling Unit?

An accessory dwelling unit is an additional residence located on the property of a primary home. It is usually self-sufficient, often including a bathroom and kitchen. Here are a few examples:

  • A converted garage
  • A stand-alone unit in the backyard
  • A basement apartment

ADUs are ideal for housing members of your extended family, giving them privacy but keeping them close. Some people also rent their ADUs for an additional income source.

Mortgages and Illegal ADUs: Making It Happen

We can help you get into the home you want, even if it has an illegal ADU. Here are the basic guidelines:

  • The ADU must contain a bathroom and kitchen.
  • The primary property must otherwise be classified as a primary single-unit residence.
  • The ADU must offer less square footage than the primary residence.
  • We consider properties with a maximum of one ADU.

How Much Is the Home Worth?

When we’re dealing with homes that have ADUs, we need to follow a couple of requirements, set by Freddie Mac, to determine your amount of financing. If a legal ADU is involved, we only need one sales comparable (known as “comps” in the real estate realm) to determine how much the home is worth. The appraiser can use an older sales comp if necessary.

If the home in question has an illegal ADU, we need two sales comparables. The appraiser must also state that the ADU doesn’t affect hazard insurance claims.

Contact MortgageDepot Today!

If you need a mortgage for a home with an accessory dwelling unit, we’re waiting for you! Stop in and have one of our experienced loan officers analyze your situation. We’ll help you get the financing you need to get into the home you want!

Contact one of our loan consultants to learn more.

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