HELOC On A Home With An ADU
A home with a legal accessory dwelling unit can qualify for at least one HELOC we offer, and at least one home equity loan program accepts more than one ADU. Here is how the ADU affects the appraisal, the property rules, and whether its rent counts.
What the ADU changes on your HELOC
The ADU decides which programs fit, how the appraiser looks at the home, and whether its rent can help you qualify.
- At least one HELOC we offer accepts a one-unit home with a legal ADU.
- Some of our HELOC programs allow one ADU but do not accept a property with more than one.
- At least one home equity loan program accepts a single-family home with more than one ADU when local rules allow it and the appraiser confirms compliance.
- The appraiser describes the ADU and analyzes any effect it has on the value or marketability of the home.
- On lines up to $250,000, at least one HELOC we offer accepts an exterior drive-by appraisal on a one-unit home with or without an ADU.
- On an investment property qualified by its rent, at least one home equity loan program can count ADU rent with a current lease and two months proof of receipt.
Homes with one ADU qualify
More than one ADU considered
Permits are not always required
Drive-by appraisal on smaller lines
Investor ADU rent can count
Primary, second home, or rental
What Counts As An ADU
The appraiser decides whether your home is one unit with an ADU or a two-unit property.
An ADU is an additional living area independent of the main home, with a fully functioning kitchen and bathroom. Examples include a living area over a garage, a basement unit, and a small addition to the main home.
Whether a home is one unit with an ADU or a two-unit property depends on the property itself. Separate utility meters, a unique postal address, and whether the unit can be legally rented can all factor in. The appraiser makes that call as part of the appraisal.
Under Fannie Mae rules, the ADU must be smaller than the main home and have its own entrance, kitchen, sleeping area, and bathroom. A second kitchen by itself does not make a space an ADU. At least one HELOC we offer follows Fannie Mae ADU guidelines.
Why choose Saxton for a HELOC on a home with an ADU
This page is for homeowners with a garage apartment, backyard cottage, basement unit, or other ADU who want to borrow against their equity.
We Check Every ADU Rule
ADU rules change from one program to the next. Some allow one ADU, at least one allows more, and permit rules differ. We match your property to a program that accepts it.
A Line Or A Fixed Loan
We offer HELOCs and closed-end home equity loans. If a HELOC does not fit your ADU setup, at least one home equity loan program may.
Your Rent Plan Comes First
We tell you up front whether ADU rent can help. On your own home, plan to qualify without it. On a rental qualified by its rent, at least one program can count it.
Rentals And Second Homes Too
At least one HELOC we offer is available on a primary residence, a one-unit second home, or an investment property.
Appraisal Options Explained
On lines up to $250,000, at least one HELOC we offer accepts an exterior drive-by appraisal on a one-unit home with an ADU. We tell you which option fits before you apply.
Older ADUs Can Qualify
Some ADUs were built before the current zoning rules. At least one program accepts a legal nonconforming use when it does not hurt the home’s value and marketability.
Hear From Homeowners Like You
Frequently Asked Questions
Straight answers on HELOCs and home equity loans for homes with an ADU.
Yes. At least one HELOC we offer accepts a one-unit home with a legal ADU. The appraiser describes the ADU and analyzes how it affects value and marketability.
Usually not on your own home. Some of our HELOC and home equity programs list ADU rent as not acceptable or require you to qualify without it. At least one home equity loan program may count it when market rent is documented on Form 1007 and its rental income rules are met. On an investment property qualified by its rent, at least one program can count ADU rent with a current lease and two months proof of receipt.
One, for many of our programs. Some HELOC programs do not accept a property with more than one ADU. At least one home equity loan program accepts a single-family home with more than one ADU when local rules allow it and the appraiser confirms compliance. At least one investment property program considers up to three ADUs on a one-unit property, case by case.
Not always. At least one program does not require the ADU to be permitted if the appraiser says it is a legal use of the property and the work was done in a skillful manner. Other programs do not accept homes with zoning violations or unpermitted additions, so we check before you apply.
It can be. An ADU is an additional living area independent of the main home with a fully functioning kitchen and bathroom, and a living area over a garage or a basement unit are examples. If the space can only be reached through the main home, Fannie Mae does not treat it as an ADU.
Not directly. Fannie Mae allows ADU rent on a one-unit primary home only for purchase or limited cash-out refinance transactions. At least one HELOC we offer is a stand-alone cash-out line, so ask us which rent rules apply to yours.
Yes. At least one HELOC we offer is available on investment properties. At least one home equity loan program qualified by the property’s rent can count the ADU’s rent with a current lease, two months proof of receipt, and an appraisal showing legal zoning. That program is for investors with at least 12 months of experience owning and managing investment real estate within the most recent 36 months.
Saxton Mortgage does. At least one HELOC program we offer accepts a home with a legal accessory dwelling unit, following Fannie Mae’s ADU guidelines.
Find out what you qualify for
Tell us about your home and your ADU, and we will check how it fits our programs.
Get Pre-Qualified- Consumer Financial Protection Bureau, home equity loan compared with a HELOC
- Consumer Financial Protection Bureau, mortgages
Loan amounts, rates, terms, and eligibility are subject to credit approval, asset and income verification, appraisal, and program guidelines. Program availability varies by state. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.