FAM Launches New ADU Refinance Option

Published on: October 4, 2021

Homeowners with ADUs can refinance, reduce monthly payments with new Finance of America Mortgage refinance feature

Homeowners who have an accessory dwelling unit, or ADU, on their property may have taken out high-interest financing to create their ADU space. Now, those homeowners can refinance and consolidate those loans, along with their primary mortgage, at a lower interest rate with an innovative new option designed by Finance of America Mortgage. 

FAM’s ADU refinance feature allows qualifying borrowers to refinance their primary mortgage and certain ADU financing into a single, new conforming loan. In turn, borrowers potentially reduce their monthly payments if they have certain ADU financing with a higher interest rate.  

Homeowners can use an ADU to generate a new stream of income or provide an affordable living space for aging parents or even adult children. 

Here’s a look at some of the key highlights of FAM’s ADU refinance option: 

  • New mortgage loan can be used to pay off high-interest ADU financing 
  • Loan amounts available up to the area’s conforming loan limit 
  • Applies to single-family, primary residences only 
  • ADU must be properly permitted, built, and zoned 

In addition to FAM’s ADU refinance loan option, FAM also allows jumbo borrowers to use ADU income to qualify for a jumbo mortgage. FAM also offers renovation loans to help homeowners purchase or build an ADU, or to renovate their home to create an attached ADU space. 

To learn more about FAM’s ADU refi option, contact a FAM Loan Advisor today.

ADUs: A deeper dive

ADUs, sometimes called in-law suites or “granny flats,” can be detached or attached to a home. Some examples of attached ADUs might be a guest space converted above an attached garage or a basement. Detached ADUs include carriage houses, guest cottages, or other structures that are free-standing from the main home structure.

By 2019, there were more than 1.4 million single-family properties with ADUs in the United States, according to research from Freddie Mac. Half of the nation’s ADUs are in four states: California, Florida, Texas, and Georgia. 

ADU market expands as U.S. housing affordability crisis deepens

ADU development has grown in the last decade as more cities relax their stance on restrictive zoning requirements. From 2009 to 2019, first-time ADU listings grew at an average annual rate of 8.6%, according to a Freddie Mac research report that analyzed property listing data. 

ADUs are seen as one solution to help address the nation’s growing housing affordability crisis. A dwindling supply of affordable housing in many areas of the country, especially on the nation’s coasts, has given rise to the growth in demand for ADUs. 

Homeowners can use their ADU to generate a new stream of income by renting it out. ADUs are also an attractive living arrangement for multigenerational households, particularly for homeowners who have aging parents or adult children who need affordable housing. 

In 2019, there were more than 4.6 million multigenerational households in the U.S., or nearly 4% of all households in the country, according to the U.S. Census Bureau’s American Community Survey. That’s a 7% increase in just nine years compared to 2010 annual figures.


Note: ADU option only available on certain loan products. Terms and restrictions apply. Not all applicants will qualify for financing.