NAR Submits Comments Supporting USDA Proposed Changes to ADU Financing Rule

The National Association of REALTORS® submitted comments on June 1 expressing support for the Rural Housing Service's proposed rule that would allow the Single Family Housing Guaranteed Loan Program to finance properties with income-producing accessory dwelling units (ADUs) and home-based business features.

Under current program rules, rural borrowers are barred from using the Guaranteed Loan Program to purchase or improve properties that have previously generated rental income from an ADU, even if the borrower has no intention of renting the unit. NAR's comments noted that this restriction is an unnecessary barrier to homeownership in rural communities already facing acute housing shortages. NAR research shows that between 2014 and 2024, the number of rural households grew by nearly 20 percent while the rural housing stock grew by just over 11 percent, contributing to rising prices and declining vacancy rates across rural America.

NAR's comments highlighted ADUs as a practical, lower-cost tool for expanding housing supply in communities where land constraints and construction costs make traditional development difficult. Removing the prohibition would also support more sustainable homeownership by enabling rental income and multigenerational living arrangements.

NAR also expressed support for the proposed clarification that properties with design features accommodating home-based business operations remain eligible for the program, noting that regulatory ambiguity on this point has created unnecessary uncertainty for lenders and borrowers.