What we verified in “Building an ADU for your family: what to check first”

Statements and where we checked them

The statements with rules, figures or dates, with the exact place in the source and the date we checked them.

1. According to Fannie Mae's Selling Guide (B2-3-04, October 8, 2025), an ADU is a living area independent of the primary home, added to it, created within it or detached from it, that must provide for living, sleeping, cooking and bathroom facilities and be on the same parcel; only one ADU is allowed per parcel and not with a two- to four-unit property; it must be smaller than the primary home and have its own entrance, kitchen, sleeping area and bathroom; it is not an ADU if it can only be reached through the primary home or is open to it with no privacy; the kitchen must have at least cabinets, a countertop, a sink with running water and a stove or stove hookup (hotplates, microwaves and toaster ovens do not count); and a second kitchen by itself is not an ADU.

   Sources 1 · Selling Guide B2-3-04, Special Property Eligibility Considerations (10/08/2025), 'Accessory Dwelling Units': 'must provide for living, sleeping, cooking, and bathroom facilities and be on the same parcel'; 'Only one ADU is permitted on the parcel'; 'ADUs are not permitted with a two- to four-unit dwelling'; 'subordinate in size to the primary dwelling'; 'separate ... means of ingress/egress, kitchen, sleeping area, bathing area, and bathroom facilities'; 'not considered an ADU if it can only be accessed through the primary dwelling'; 'cabinets; a countertop; a sink with running water; and a stove or stove hookup (hotplates, microwaves, or toaster ovens are not acceptable stove substitutes)'; 'An independent second kitchen by itself does not constitute an ADU' · Checked October 31, 2026

2. According to Fannie Mae's Selling Guide (B2-3-04), an ADU can be site-built or factory-built, including a HUD Code manufactured home classified as real property; examples include a living area over a garage, in a basement or in a small addition; if current zoning allows it, it is considered legal; and if zoning does not allow an ADU under any circumstance, the property is only eligible if the lender confirms the unit will not jeopardize a future property insurance claim and the appraisal requirements are met.

   Sources 1 · Selling Guide B2-3-04, 'Construction of an ADU': 'site- or factory-built, including modular, and single- or multi-width HUD Code manufactured homes that are legally classified as real property'; 'Examples of ADUs': 'a living area over a garage, a living area in a basement, a small addition to the primary dwelling'; 'Zoning for an ADU': 'An ADU should always be considered legal if it is allowed under the current zoning code'; 'where an ADU is not allowed under any circumstance'; 'The lender confirms that the existence will not jeopardize any future property insurance claim' · Checked October 31, 2026

3. According to Fannie Mae's Selling Guide (B5-3.2-01, December 10, 2025), a HomeStyle Renovation loan can be used to build outdoor buildings and structures when local zoning allows and they meet building codes, for example accessory units; it cannot be used to tear down and rebuild the whole home; and lenders need special approval to deliver these loans before the work is finished.

   Sources 2 · Selling Guide B5-3.2-01, HomeStyle Renovation Mortgages (12/10/2025), 'Allowable Improvements': 'HomeStyle Renovation may be used to construct various outdoor buildings and structures when allowed by local zoning regulations'; 'must be in compliance with any applicable building codes'; 'Examples of acceptable structures include, but are not limited to, accessory units'; 'may not be used for complete tear-down and reconstruction of the dwelling'; 'Lenders must obtain special approval to deliver these types of loans' · Checked October 31, 2026

4. According to HUD Handbook 4000.1, for FHA an ADU is a single habitable living unit with its own means of entry and exit that meets the minimum requirements for a living unit, smaller than the primary home and added to it, created within it or detached; a one-unit home with a single ADU remains a one-unit property; and the ADU must comply with zoning, which may include a legal nonconforming use.

   Sources 3 · Handbook 4000.1 (last revised August 12, 2026), II.A.1, '(4) Accessory Dwelling Unit', p. 171: 'a single habitable living unit with means of separate ingress and egress that meets the Minimum Requirements for Living Unit'; 'subordinate in size and can be added to, created within, or detached from a primary one-unit Single Family dwelling'; 'A Single Family residential one-unit Property with a single ADU remains a one-unit Property'; II.D, '(E) Accessory Dwelling Unit', p. 819–820: 'The ADU must comport with zoning requirements, which may include a legal nonconforming use' · Checked October 31, 2026

5. According to HUD Handbook 4000.1 (203(k) program section effective November 10, 2026), the Standard 203(k) requires at least $5,000 in improvements, and eligible improvements include converting a one-family home into a home with an ADU, adding an ADU attached to the existing home and renovating an existing ADU, attached or detached.

   Sources 3 · Handbook 4000.1, II.A.8, 'Programs and Products - 203(k) Rehabilitation Mortgage Insurance Program (11/10/2026)', 'vi. Standard 203(k) Transactions', p. 393–394: 'The Standard 203(k) requires a minimum of $5,000 in eligible improvements'; 'converting a one-family Structure to a one-family Structure with an ADU'; 'adding an Accessory Dwelling Unit (ADU) that will be attached to an existing Structure'; 'renovating an existing ADU that is attached or unattached to an existing Structure' · Checked October 31, 2026

6. According to the ADU Handbook of the California Department of Housing and Community Development (HCD, March 2026), in California ADUs and junior ADUs (JADUs) are approved without discretionary review or a hearing, under objective standards; the permitting agency must approve or deny the application within 60 days of receiving it complete, if there is already a home on the lot; and if it denies it, it must give you in writing the list of what is missing or wrong and how to fix it within those 60 days.

   Sources 4 · ADU Handbook (March 2026), 'Summary of Recent Changes': 'Requires a permitting agency to either approve or deny ... an application to create or serve an ADU or JADU within 60 days from when a completed application is received, if there is an existing single-family or multifamily dwelling on the lot (Gov. Code, §§ 66317, subd. (a)(3); 66335, subd. (a)(3))'; 'return in writing a full set of comments ... with a list of items that are defective or deficient, and a description of how the application can be remedied'; FAQ 'Are ADUs and JADUs permitted ministerially?': 'without discretionary review or a hearing' · Checked October 31, 2026

7. According to HCD's ADU Handbook (March 2026), in California a local government cannot require the owner to live on the property to have an ADU, except in one case of separate sale; a JADU is a unit of no more than 500 square feet inside a single-family home; if the JADU shares a bathroom with the home, owner occupancy is required; and local governments may require ADUs to be rented for terms longer than 30 days.

   Sources 4 · ADU Handbook (March 2026), 'Owner-Occupancy': 'Otherwise, a local agency cannot impose an owner-occupancy requirement on any other ADU (Gov. Code, § 66315)'; Glossary, JADU: 'no more than 500 square feet in interior livable space and contained entirely within a single-family residence'; 'If a JADU has shared sanitation facilities with the primary structure, owner-occupancy will be required'; 'Rental Terms': 'Local agencies may require that ADUs and JADUs be rented for terms longer than 30 days' · Checked October 31, 2026

8. According to the IRS (Publication 527, for 2025 returns), in most cases you must include in gross income everything you receive as rent; a day of personal use of a unit is any day a member of your family uses it, unless it is their main home and they pay a fair rental price, or anyone pays less than a fair rental price; family includes only your spouse, siblings, half siblings, ancestors (parents, grandparents) and lineal descendants (children, grandchildren); and a fair rental price is generally what someone not related to you would pay.

   Sources 5 · Publication 527 (2025), Residential Rental Property: 'In most cases, you must include in your gross income all amounts you receive as rent'; 'What is a day of personal use?': 'A member of your family ... unless the family member uses the dwelling unit as their main home and pays a fair rental price'; 'Family includes only your spouse, siblings, half siblings, ancestors (parents, grandparents, etc.), and lineal descendants (children, grandchildren, etc.)'; 'Anyone at less than a fair rental price'; 'Fair rental price': 'the amount of rent that a person who isn’t related to you would be willing to pay' · Checked October 31, 2026

9. According to the CFPB, the counseling agencies in its search tool are approved by HUD and offer independent advice, often at little or no cost, on buying a home, renting, defaults, forbearances, foreclosures and credit; you search by ZIP code; and not every agency offers every service.

   Sources 6 · Find a Housing Counselor: 'approved by the U.S. Department of Housing and Urban Development (HUD)'; 'offer independent advice, often at little or no cost to you'; 'buying a home, renting, defaults, forbearances, foreclosures, and credit issues'; 'Search by ZIP code'; 'Not every housing counselor offers all services' · Checked October 31, 2026