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Updated almost 3 years ago on . Most recent reply
When ADU pushes you to 5 units how does lending work?
I haven't seen this scenario posted anywhere. If building a new ground up ADU on an existing 4-plex property - how do lenders look at this since there are now 5 units:
- Would it qualify for commercial loan?
- Would it qualify for conventional financing?
Most Popular Reply

Quote from @Liz J.:
Hi Dan, are you saying any property with ADU will not be conventional? I just want to be sure I am understanding because when there is not an ADU a 4-plex does get convention Freddie/Fannie financing.
Correct. by rules an ADU added to a multiplex does not qualify for residential Fannie/Freddie financing. However, I have seen multiplexes with ADU get residential F/F financing (against the criteria). I have also heard cases where multiplexes with ADU failed to get residential F/F financing. The safe approach is to assume you will not be able to get residential F/F financing. You should be able to Google this and/or search the BP forums for information on this.
Many people believe that as ADUs get more prevalent the financing rules will change to accommodate the ADUs.
Good luck