ADU Expansion and Manufactured Home Renovations: What Fannie Mae’s New Guidelines Mean

Under Fannie Mae’s updated renovation lending guidelines, borrowers now have access to broader project possibilities than ever before.

Key updates include:

• Single-unit properties may include up to three ADUs, subject to local zoning and land-use compliance

• ADUs are now permitted on single-wide manufactured homes, expanding housing flexibility in non-traditional settings

• Renovation cost caps on manufactured homes have been removed and aligned with the property’s as-completed value, allowing for more comprehensive improvements

These changes remove long-standing barriers and open the door to more impactful renovation projects.

With greater flexibility, borrowers can now pursue renovation strategies that support long-term financial and lifestyle goals.

Expanded ADU options create opportunities for:

• Rental income generation to offset housing costs

• Multigenerational living solutions, including aging-in-place and family housing

• Workforce and affordable housing expansion in high-demand markets

• Increased property value and functional use of land

For many homeowners, ADUs turn renovation projects into sustainable investments rather than short-term upgrades.

Manufactured homes represent a significant portion of affordable housing stock, yet renovation financing has historically been restrictive. By aligning renovation limits with as-completed value, Fannie Mae now allows borrowers to modernize, repair, and improve manufactured homes more effectively.

Eligible improvements may include:

• Structural repairs and system upgrades

• Energy efficiency and resiliency improvements

• Health and safety corrections

• Accessibility and livability enhancements

These updates help preserve existing housing stock while improving safety and long-term durability.