House Hacking with DADU

[Dustin Berman]

I live in Seattle and could use some input and advice on achieving my goal of living independent with little to no housing costs.

I am hoping to achieve this by taking advantage of newly enacted DADU laws in Seattle. I want to buy a house, build a DADU on the property, then rent the main home and live in the DADU. I'm essentially trying to have someone cover my living expenses by paying rent on the main home.

I am hoping to get a loan and pay the minimum down payment, then use the money I would have used as a down payment to pay for building the DADU. From there I would then get the home value reassessed to hopefully bring up the equity in the home to 20% or more and eliminate paying PMI. The DADU sounds like it will cost about $100-140k.

I'm really not familiar with loan options, but I understand that in Seattle the jumbo loan limit is around $726k. What loan options should I look into that will allow me to put the smallest amount down? My girlfriend and I make $140k/yr combined.

I'm looking for input on this plan, a check on if my logic is sound, and if there are any potential issues that I need to be aware of.