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#1 VA Lenders Handbook (Pamphlet 26-7) Page 388

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Appraisal Report 11-10 6. Accessory Dwelling Unit Change Date February 22, 2019 • This Chapter has been revised in its entirety. a. Single Real Estate Entity An Accessory Dwelling…

VA Lenders Handbook (Pamphlet 26-7) · VA-Lender-Handbook.pdf · Page 388 · View at official source (VA.gov — Appraisers/Staff Appraisal Reviewer) →

Appraisal Report 11-10 6. Accessory Dwelling Unit Change Date February 22, 2019 • This Chapter has been revised in its entirety. a. Single Real Estate Entity An Accessory Dwelling Unit (ADU) is a living unit including kitchen, sleeping, and bathroom facilities added to or created within a single-family dwelling, or detached on the same site. A manufactured home on the site could be an ADU. The dwelling and the ADU together constitute a single real estate entity. b. Highest and Best Use As part of the highest and best use analysis, the appraiser must determine if the property is a single-family dwelling with an ADU, or a two-family dwelling. The highest and best use must be a legal use (see Topic 10). A two-family dwelling must be appraised on the Fannie Mae Form 1025, Small Residential Income Property Appraisal Report. c. ADU Valued Separately An ADU is usually subordinate in size, location, and appearance to the primary dwelling unit and may or may not have separately metered utilities and separate means of ingress and egress. The appraiser must not include the living area of the ADU in the calculation of the GLA of the primary dwelling. The ADU must be valued separately as a line item on the market data grid. d. Notify the Lender if More than One Unit The appraiser must notify the lender if a property has more than one ADU. e. Detached Buildings A manufactured home, shed, or other detached building on the property which does not have kitchen, sleeping, and bathroom facilities or cannot be legally used as a dwelling, may be valued as storage space if it does not present any health or safety issues.

#2 HUD/FHA Single Family Handbook 4000.1 Page 613

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B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 586 Last Revised: 11/26/2025 (b) Standard The Mortgagee must obtain a completed…

HUD/FHA Single Family Handbook 4000.1 · HUD_FHA_4000.1.pdf · Page 613 · View at official source (HUD.gov — SFH Handbook 4000.1) →

B. Title II Insured Housing Programs Reverse Mortgages 2. Origination/Processing Handbook 4000.1 586 Last Revised: 11/26/2025 (b) Standard The Mortgagee must obtain a completed form HUD-92561. (3) Three- to Four-Unit A three- to four-unit Property is either: • a Single Family residential Property with three to four individual Dwelling Units; or • a Single Family residential Property with two individual Dwelling Units and one ADU or three individual Dwelling Units and one ADU. The Mortgagee must obtain a completed form HUD-92561. (4) Accessory Dwelling Unit (a) Definition An Accessory Dwelling Unit (ADU) refers to a single habitable living unit with means of separate ingress and egress that meets the minimum requirements for a living unit. An ADU is a private space that is subordinate in size and within, or detached from a primary one-unit Single Family dwelling, which together constitute a single interest in real estate. (b) Standard A Single Family residential one-unit Property with a single ADU remains a one-unit Property. For any Single Family residential Property with two or more units, a separate additional Dwelling Unit must be considered as an additional unit. (5) Condominium Unit (a) Definitions A Condominium Unit refers to real estate consisting of a one-family Dwelling Unit in a Condominium Project. Condominium Project refers to a project in which one-family Dwelling Units are attached, semi-detached, detached, or Manufactured Home units, and in which owners hold an undivided interest in Common Elements. (b) Standard A Condominium Unit must be either located within an FHA-approved Condominium Project, meet FHA’s definition of a Site Condominium, or have

#3 HUD/FHA Single Family Handbook 4000.1 Page 852

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D. Appraiser and Property Requirements for Title II Forward and Reverse Mortgages 3. Acceptable Reporting Forms and Protocols (04/10/2025) Handbook 4000.1 825 Last Revised:…

HUD/FHA Single Family Handbook 4000.1 · HUD_FHA_4000.1.pdf · Page 852 · View at official source (HUD.gov — SFH Handbook 4000.1) →

D. Appraiser and Property Requirements for Title II Forward and Reverse Mortgages 3. Acceptable Reporting Forms and Protocols (04/10/2025) Handbook 4000.1 825 Last Revised: 11/26/2025 The Appraiser must report when the Property has security bars on bedroom windows or doors. (C) Nonstandard House Styles (1) Definition Nonstandard House Style refers to unique Properties in the market area, including log houses, earth sheltered housing, dome houses, houses with lower than normal ceiling heights, and other houses that in the Appraiser’s professional opinion, are unique. (2) Required Analysis and Reporting The Appraiser must provide a comment that the nonstandard house style appears structurally sound and readily marketable and must apply appropriate techniques for analysis and evaluation. In order for such a Property to be fully marketable, the Appraiser must demonstrate that it is located in an area of other similar types of construction and blend in with the landscape. The Appraiser may require additional education, experience, or assistance for these types of Properties. (D) Modular Housing (1) Definition Modular Housing refers to Structures constructed according to state and local codes off-site in a factory, transported to a building lot, and assembled by a contractor into a finished house. Although quality can vary, all of the materials – from framing, roofing and plumbing to cabinetry, interior finish and electrical – are identical to what is found in comparable quality conventional “stick-built” housing. (2) Required Analysis and Reporting The Appraiser must treat Modular Housing the same as stick-built housing, including reporting the appraisal on the same form. The Appraiser must select and analyze appropriate comparable sales, which may include conventionally built housing, Modular Housing or Manufactured Housing. (E) Accessory Dwelling Unit (1) Identification of an Accessory Dwelling Unit An Accessory Dwelling Unit (ADU) is subordinate in size, location, and appearance to the primary Dwelling Unit and may or may not have separately

#4 UAD 3.6 / URAR (FNMA) Page 346

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Appendix 1: Glossary Appendix F-1: URAR Reference Guide Page 346 of 375 Version 1.3 Appendix 1: Glossary Term Definition Accessory Dwelling Unit (ADU) An additional living area…

UAD 3.6 / URAR (FNMA) · Appendix F-1 URAR Reference Guide v1.3.pdf · Page 346 · View at official source (fanniemae.com/uad) →

Appendix 1: Glossary Appendix F-1: URAR Reference Guide Page 346 of 375 Version 1.3 Appendix 1: Glossary Term Definition Accessory Dwelling Unit (ADU) An additional living area that is independent of the primary dwelling unit that includes a kitchen, full bathroom, and sleeping area. It has a separate ingress and egress from the primary dwelling unit. It is generally subordinate in size and location to the primary dwelling, and may be attached to a house or garage, or built as a stand-alone unit. Generally, it will use the utility connections of the primary house. Apparent Environmental Condition A contamination (hazard or nuisance) that may affect the value and marketability of the site. Assessor Record Recorded information that identifies and describes real estate property (e.g., a record of transactions, value for taxation purposes), sometimes referred to as a property record, tax card, or public record. Below Grade A level that is either entirely or partially below the ground level. If any portion of an area is below ground level, then the entire level is considered below grade. Community Land Trust (CLT) A non-profit entity, or federal, state, or local government that owns land and leases it under a long-term ground lease to a homebuyer who purchases the improvements on the land. The ground lease contains certain land use restrictions that preserve use of the property for affordable housing. Deferred Maintenance Lack of normal maintenance and upkeep that may result in repairs or replacement of items. Dwelling Any building containing living unit(s) designed to be used as residence(s). A portion of the dwelling may also contain ADU(s). Extraordinary Assumption An assumption as of the effective date of the appraisal results, which, if found to be false, could alter the appraiser’s opinions or conclusions. In essence, an extraordinary assumption is what the appraiser assumes to exist (e.g., evidence of termite infestation). Finished Area Whether above or below grade, an area is considered finished when it is enclosed, suitable for year-round living, and meets locally accepted standards. Reference published guidelines by the GSEs, government agencies, or other identified secondary market participants for specific guidance. Floor Plan A visual representation or diagram that shows the interior and exterior walls, doors, and stairs of a dwelling. Hypothetical Condition A condition that is contrary to what is known by the appraiser to exist on the effective date of the assignment. The hypothetical condition is used to value

#5 UAD 3.6 / URAR (FNMA) Page 6

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6 Example 2 - One level with ADU with interior/exterior access and ceilings equal to or greater than 7 feet • 1,291 square feet one level home with 728 square feet attached ADU…

UAD 3.6 / URAR (FNMA) · uad-ansi-reporting-requirements-job-aid.pdf · Page 6 · View at official source (fanniemae.com/uad) →

6 Example 2 - One level with ADU with interior/exterior access and ceilings equal to or greater than 7 feet • 1,291 square feet one level home with 728 square feet attached ADU that is accessible from the primary dwelling unit • Finished Above Grade Area (Dwelling) = 1,291 square feet • Finished Above Grade Area (Attached ADU) = 728 square feet Input into your software Dwelling and ADU count with Levels Units Excluding ADUs 1 Levels in Unit 1 Accessory Dwelling Units 1 Levels in Unit 1 Area Breakdown Dwelling Finished Above Grade 1,291 Sq. Ft. Finished Above Grade (Nonstandard) 0 Sq. Ft. Unfinished Above Grade 0 Sq. Ft. Finished Below Grade 0 Sq. Ft. Finished Below Grade (Nonstandard) 0 Sq. Ft. Unfinished Below Grade 0 Sq. Ft.

#6 Freddie Mac Seller/Servicer Guide Page 47

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the mandatory effective November 2, 2026 version of this section. This section contains requirements related to: Eligible properties with ADUs Ineligible properties with ADUs…

Freddie Mac Seller/Servicer Guide · Freddie_Mac_Guide_2026-06-25.txt · Page 47 · View at official source (guide.freddiemac.com) →

the mandatory effective November 2, 2026 version of this section. This section contains requirements related to: Eligible properties with ADUs Ineligible properties with ADUs Appraisal requirements Manufactured Home ADUs (a) Eligible properties with ADUs Freddie Mac will purchase an eligible Mortgage secured by a 1-, 2- or 3-unit property that has one ADU. For Mortgages secured by Manufactured Homes, including CHOICEHomes®, with an ADU, the primary dwelling unit must be a multiwide Manufactured Home. An ADU is classified as an additional finished area that: Includes a kitchen, bathroom and separate entrance. Note: The absence of cooking appliance(s) in a kitchen does not change the classification as an ADU. Is independent of the primary dwelling unit Is smaller in size than the primary dwelling unit (i.e., the ADU's finished area is less than the primary dwelling unit's finished area) and Contributes less to the value of the property than the primary dwelling unit Examples of eligible ADU configurations include: A 1-, 2-, or 3-unit dwelling with an ADU above a garage or outbuilding, A dwelling with an attached or detached ADU, or A dwelling with an ADU in the basement (b) Ineligible properties with ADUs Mortgages secured by the following ADU configurations are not eligible for purchase by Freddie Mac: A 2- or 3-unit property with an ADU that does not comply with zoning and land use requirements (illegal zoning) A 1-, 2- or 3-unit property with two or more ADUs A 4-unit property with an ADU (c) Appraisal requirements The appraiser must determine whether the subject property has an ADU and report the appraisal on the appropriate form. When determining whether the subject property has an ADU, the appraiser must consider zoning and land use requirements and all property characteristics, specifically the unit's utility and the property’s highest and best use. If the appraiser determines the subject property has an ADU, the appraisal report must include: A detailed description of the ADU Any effect the ADU has on the market value or marketability of the subject property Specific information about the ADU, including but not limited to its general condition, its room count (including the number of bedrooms and baths) and the finished square footage area (i) For properties with legal or legal non-conforming zoning compliance or locations without zoning If the subject property ADU complies with the zoning and land use requirements (legal or legal non-conforming or locations without

#7 Fannie Mae Selling Guide Page 585

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explains the reasons they did not use a gross building area comparison, and clearly describes the comparisons that were made. Accessory Dwelling Units An ADU is generally an…

Fannie Mae Selling Guide · Selling Guide - 06-03-2026.pdf · Page 585 · View at official source (selling-guide.fanniemae.com) →

explains the reasons they did not use a gross building area comparison, and clearly describes the comparisons that were made. Accessory Dwelling Units An ADU is generally an additional living area independent of the primary dwelling that may have been added to, created within, or detached from the primary dwelling. The ADU must have basic requirements for living, sleeping, cooking, and bathroom facilities on the same parcel as the primary dwelling. See B2-3-04, Special Property Eligibility Considerations, for complete ADU eligibility requirements. When reporting the living area of an ADU, it should not be included with the finished above-grade square footage calculation of the primary dwelling. It should be reported and adjusted for on a separate line in the grid, unless the ADU is contained within or part of the primary dwelling with interior access and above grade. If a standalone structure does not meet the ADU minimum requirements, it should be treated as any other ancillary structure and included as a separate line item in the sales comparison approach then adjusted based on its contributory value to the subject property. Whether a property is defined as a one-unit property with an ADU or a two- to four-unit property will be based on the characteristics of the property, which may include, but are not limited to, the existence of separate utility meter(s), a unique postal address, and whether the unit can be legally rented. The appraiser must determine compliance with this definition as part of the analysis in the Highest and Best Use section of the appraisal. When there is an ADU, the appraisal report must include a description of the ADU and analysis of any effect it has on the value or marketability of the subject property. The appraisal report must demonstrate that the improvements are acceptable for the market. An aged settled sale will qualify as a comparable, and an active listing or under contract sale will qualify as a supplemental exhibit to show marketability. Zoning for an ADU If it is determined that the property contains an ADU that is not allowed under zoning (where an ADU is not allowed under any circumstance), the property is eligible under the following additional conditions: The lender confirms that the existence will not jeopardize any future property insurance claim that might need to be filed for the property. The illegal use conforms to the subject neighborhood and to the market.

#8 Fannie Mae Selling Guide Page 3

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Accessory dwelling units and manufactured homes updates We expanded our accessory dwelling unit (ADU) criteria to meet the growing demand for flexible and affordable housing…

Fannie Mae Selling Guide · Selling Guide Announcement SEL-2025-10.pdf · Page 3 · View at official source (selling-guide.fanniemae.com) →

Accessory dwelling units and manufactured homes updates We expanded our accessory dwelling unit (ADU) criteria to meet the growing demand for flexible and affordable housing solutions. ADU expanded eligibility updates to our Selling Guide UAD 3.6 Policy Supplement include: • Multi-unit properties: Allows two- to three-unit properties to include ADUs, provided the number of dwelling units in the primary structure plus the ADUs does not exceed four. • Multiple ADUs on single-unit properties: Extends eligibility to one-unit properties with up to three ADUs. • One ADU for standard manufactured housing: Extends eligibility to single-unit manufactured homes (single- or multi- section) as the primary dwelling with a single ADU classified as real property. • Multiple ADUs for MH Advantage®: Extends eligibility to (single- or multi-section) MH Advantage as the primary dwelling, to include ADUs provided the number of dwelling units plus the ADUs (which must all be classified as real property) does not exceed four. Properties with multiple ADUs must still be classified as either single-unit or two- to three-unit principal residences. Manufactured Homes expanded eligibility reflects a significant step toward expanding financing access and modernizing appraisal standards for diverse manufactured housing configurations. The revisions include: • Single- and Multi-section: Updates to definitions • Manufactured Home: Extends eligibility to two- to four-unit properties. • Multi-story Manufactured Homes: Extends eligibility to multi-story manufactured homes. Effective: These changes are effective Mar. 31, 2026, and are only available to lenders utilizing UAD 3.6 policy. Preventing, detecting, and reporting mortgage fraud clarifications We eliminated duplicative and overly specific language regarding closing attorneys, settlement agents, and appraiser selection criteria. We added references to additional seller/servicer resources for identifying fraud and clarified that any valid match to the Department of Treasury Office of Foreign Assets Control (OFAC) sanctions list must be reported to Fannie Mae within 24-hours of identification. Effective: Lenders may take advantage of these clarifications immediately. Miscellaneous update B2-1.3-01, Purchase Transactions, B2-2-03, Multiple Financed Properties for the Same Borrower, B2-2-06, Homeownership Education and Housing Counseling, and B3-5.4-01, Eligibility Requirements for Loans with Nontraditional Credit: We made additional miscellaneous changes to align these topics with updates previously communicated in Selling Guide Announcement SEL-2025-09. The minor clarifications relate to the removal of minimum credit score requirements for DU loans. Lenders may contact their Fannie Mae Account Team if they have questions about this Announcement. Have guide questions? Get answers to all your policy questions, straight from the

Chief Appraiser Says Reading the actual guideline text below — never a general AI guess

# What "ADU" Actually Means Here's what we're looking at: an ADU is a smaller, independent living unit (with its own kitchen, bathroom, and bedroom) that's either attached to or sitting separately on the same property as the main house. VA, FHA, Fannie Mae, and Freddie Mac all agree it has to be smaller than the primary dwelling and subordinate to it in size and location. The key difference across the guidelines is that VA and Fannie Mae allow one ADU on a single-family property and still call it a one-unit home for appraisal purposes, while FHA defines a one-unit property with one ADU the same way. Freddie Mac will purchase mortgages on 1-, 2-, or 3-unit properties with one ADU, but not on properties with two or more ADUs or on 4-unit properties with an ADU. When an appraiser values a property with an ADU, they have to report the ADU's square footage separately—not mixed in with the main house's size—and explain how it affects the property's value. Straight from VA Lenders Handbook, HUD/FHA 4000.1, Fannie Mae Selling Guide, and Freddie Mac Seller/Servicer Guide — nothing added.

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