Using an ADU for projected income on FHA loan

[Chris Azhocar]

My wife and I have been looking at multifamily property in San Diego County, and have comeacross an odd situation. There is a specific property listed as an R1 containing a 4/1 SFR with a detached 3-car garage and 1/1 ADU (granny flat) above the garage which may not be permitted. We haven't had anyone look at the ADU to see if it meets the codes, but there doesn't look to be any glaring issues with the unit's construction.

Now, if this was on a lot zoned for multiple units, we would qualify for it with no problem using projected income on the ADU. California (San Diego in particular) recently became extremely lax on the construction and permitting of ADUs, which brings me to the forums. Is there any way to utilize projected rental income on the ADU for our loan if we plan on getting it permitted as soon as the County will let us?

My current lender was skeptical about it since the lot is zoned R1, so I'm looking for any additional information from more experienced minds.

Thanks all!

[Diane Campochiaro]

Hi Chris,

In my experience (I was a lender for 20yrs before getting into selling multi-family) you can not use income from a granny flat to qualify.   Especially projected - an appraiser can only come up with projected rents for a legal unit additionally.   It's just going to be gravy for you as far as rental income.

Lenders look at a granny flat as just that.   Kind of a bummer.