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Freddie Mac Allows Rental Income From ADU’s
If you’re a homeowner with an accessory dwelling unit (ADU) on your property, you may be wondering how the rental income from the ADU will impact your ability to qualify for a mortgage. If you’re working with Freddie Mac, you’ll be happy to know that the company allows rental income from ADUs to be used when determining your eligibility for a loan. In this blog post, we’ll explore how Freddie Mac considers ADU rental income and what you need to know before applying for a mortgage.
What is an ADU?
An ADU is a secondary dwelling unit on a property that is separate from the primary residence. These units are often used as rental properties, and the income generated from them can be a valuable asset for homeowners looking to qualify for a mortgage.
How does Freddie Mac consider ADU rental income?
Freddie Mac is a government-sponsored enterprise (GSE) that provides financing to mortgage lenders. As part of its mortgage guidelines, Freddie Mac allows homeowners to use the rental income from ADUs to qualify for a mortgage.
To use ADU rental income to qualify for a mortgage with Freddie Mac, you’ll need to provide documentation of the income, including lease agreements and income statements. Freddie Mac will consider a percentage of this income when evaluating your loan application, taking into account the stability of the income and the expenses associated with maintaining the ADU.
What do I need to know before using ADU rental income to qualify for a mortgage with Freddie Mac?
There are a few things you should keep in mind when using ADU rental income to qualify for a mortgage with Freddie Mac:
- Be prepared to provide documentation: Freddie Mac will require documentation of the income you receive from your ADU, including lease agreements and income statements. Be prepared to provide these documents as part of your loan application.
- Consider the stability of the income: Freddie Mac will want to see that the income from your ADU is stable and likely to continue in the future. If you have a long-term tenant or a consistent rental history, this can help strengthen your loan application.
- Be aware of expenses: While the income from your ADU can be used to qualify for a mortgage, Freddie Mac will also consider the expenses associated with maintaining the unit. These expenses may include property taxes, insurance, and repair and maintenance costs.
Freddie Mac’s decision to allow rental income from ADUs to be used when determining eligibility for a mortgage is good news for homeowners who are looking to purchase a property with an accessory dwelling unit. By understanding how this income can be used and what Freddie Mac will consider when evaluating your loan application, you can increase your chances of securing the financing you need.