Homeownership Tips
Understanding the Difference Between Single Family Homes with Accessory Dwelling Units and Duplexes

It’s no secret that there is a shortage of affordable housing available in most markets throughout the country. This combined with rising housing costs has created a unique challenge in many communities looking to accommodate growing housing demand. However, there is one solution that’s gaining favor in many areas – Accessory Dwelling Units (ADUs).

What is an ADU?

You may know it by one of its countless other common names, including granny flat, carriage house, in-law suite or garage apartment. No matter what you call them, the main reasons people build ADUs are either to gain incremental income via rent or to house a family member.

What Makes a Secondary Living Space an ADU?

To start with, ADUs are secondary housing units located on a single family residentially zoned lot (versus a lot zoned for multi-family properties). In addition, Other attributes that distinguish ADUs include:

  • Are typically smaller than the main residence.
  • Include a fully functioning kitchen and bathroom.
  • Can be attached or detached from the Single-Family Residence, can be an apartment over an attached or detached garage, or can be a separate structure standing apart from the main residence.
  • Must have a separate entrance from the outside, and usually does not have a way to enter directly from the main residence.
  • Does not have a separate address or mailbox from the main residence.

However, a traditional duplex does not qualify as an ADU. A duplex is defined as two dwelling units with unique addresses/mailboxes but with only one owner of record on the parcel. In addition, duplexes must be built on a single residential lot that is zoned for multifamily construction.

Qualifying for a Property with an ADU

Today, whether building a new home or buying an existing property, more and more people are looking for layouts with an ADU or ADU-potential, such as garage or basement suitable to convert. There are even some instances where the existing structure may be an ADU (think of a garage apartment, carriage house, or barn with living quarters), and homeowner is considering adding a larger Single-Family Residence to the parcel. Either way, there are special guidelines and restrictions that apply to getting a home loan for properties with ADUs.

PrimeLending’s Construction Loan Program is designed to finance the construction of a new Single-Family Residence with an ADU, adding an ADU to an existing Single-Family Residence, or adding a Single-Family Residence to an existing ADU. Some additional restrictions apply, so it’s important to work with a lender who understands the special requirements associated with ADUs.

Want to find out more?  Contact your local PrimeLending loan officer, or call 1-800-317-7463 for more details!

Written By Mandy Jordan