ADUs and Mortgages – GreenBuildingAdvisor

By Fernando Pages Ruiz | September 9, 2025

There’s a bill in Congress that would allow mainstream lenders to treat accessory dwelling units like regular mortgage loans rather than a one-off renovation challenge. If that path opens—through HUD insurance and the secondary market—it won’t make ADUs inexpensive, but it will make them easier to finance on a larger scale. That is the difference between a niche and a full-fledged industry.

First, the term: An accessory dwelling unit (ADU) is a small, code-compliant dwelling connected to the grid, with a kitchen and a sleeping area. It is not a tiny house on wheels or an off-grid camper with a sink. “ADUs … are really a full area for somebody to live in,” author Sheri Koones told me when we talked about her new book, ADUs: The Perfect Housing Solution. The distinction matters because building officials, lenders, and appraisers depend on it.

Financing is a common stumbling block in nearly every ADU discussion. Paul Dashevsky, a builder, investor, and co-CEO of Maxable, hears about it every day: “Financing is one of the hurdles … I’ve never heard anyone say, ‘The financing was the easy part.’” If Congress develops a clear product that banks can offer and GSEs can purchase, he believes major institutions will “open up the floodgates.” These aren’t just words; they’re insights from five years immersed in California’s ADU boom.

Why should green builders care? Because ADUs add households without paving a new subdivision or driving families to the exurbs. “Build in an urban area where you can multiply units on land that’s already there … The alternative is sprawl,” Dashevsky said. That is the carbon story in one line: short runs of pipe and wire, existing streets, and fewer miles on the odometer.