Accessory dwelling units or ADUs — separate living units shared on a single-family lot separate from the main home— have gained in popularity.
ADU’s create affordable housing opportunities and can increase property values. They can be a great source of rental income or serve as living quarters for adult children or extended family. They can also provide work-from-home space.
In 2026, both federal lending policy and state ADU laws saw major updates that expanded ADU eligibility, simplified permitting, and clarified income treatment for borrowers. Locally, many SC counties and municipalities revised ADU guidelines to address the demand for these housing units.
In March, Fannie Mae released updated underwriting guidelines to allow for income from ADU’s to be counted toward qualifying income for principal residence purchases and refinances provided certain requirements are met.
If you are considering an ADU, check with your local governing body for updated guidelines. If you are in an HOA, it is important to verify if ADUs are permitted and review any applicable restrictions or requirements.
Federal Lending Policy Changes (Fannie Mae, March 2026)
Fannie Mae’s Desktop Underwriter (DU) Version 12.1 update, effective March 21, 2026, aligns with Selling Guide announcements SEL‑2025‑08 and SEL‑2025‑10 Fannie Mae:
- Rental income from ADUs can now count toward qualifying income for one‑unit, principal residence, purchase, and limited cash‑out refinance loans (including manufactured homes), provided certain requirements are met.
- 30% cap on ADU rental income relative to total qualifying income is now enforced in underwriting.
- HomeStyle Refresh and HomeStyle Renovation policies expanded, including removal of a $50,000 cap on manufactured home renovation costs.
- Manufactured home eligibility expanded to include two‑ to four‑unit and multi‑story units.
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Real Estate Matters in Charleston SC - Gena Glaze 