Bipartisan ADU Financing Bill Introduced in Congress
- Jonathan Berk
- Jul 18
- 2 min read
Congressman Sam Liccardo (D-CA) and Congressman Andrew Garbarino (R-NY) introduced H.R. 4479 today in Congress. The Supporting Upgraded Property Projects and Lending for Yards (SUPPLY) Act aims to increase financing options for Accessory Dwelling Units (ADUs), also referred to as backyard cottages, granny flats, or in-law suites, as one response to a growing National housing crisis.
Throughout the nation, ADUs have emerged as a crucial solution for the housing crisis. However, most ADUs are currently funded through savings or HELOCs by relatively wealthy homeowners, as lower-income and younger homeowners often cannot secure second loans due to insufficient equity. The SUPPLY Act aims to offer government-backed, flexible financing options to assist homeowners with limited means in overcoming what is frequently the final obstacle to starting construction on an ADU.
Key Provisions of SUPPLY
ADU Loan Insurance HUD will operate a program to insure second liens used solely to finance ADU construction, established within two years of enactment.
Loan Caps & Income Offsets The insured loan cannot exceed:
30% of the maximum FHA-insurable amount for a one-unit home, or
Up to 100% of the projected post-construction property value (inclusive of existing mortgages).Additionally, HUD may increase the loan cap by 50% of projected ADU rental income, improving affordability calculations .
Borrower Requirements & Premiums Borrowers must be owner-occupants and submit HUD-approved applications. HUD may set premiums up to 1% annually of the insured amount.
Reporting & Rulemaking HUD must provide annual reports to Congress on program activities, and has authority to issue implementing regulations.
Secondary Market Integration
GSE Participation Fannie Mae and Freddie Mac (FHFA-regulated) are authorized to purchase and securitize these ADU-insured loans, expanding their liquidity. The FHFA Director retains discretionary power to limit this activity if systemic risk arises.
The SUPPLY Act addresses a significant obstacle—ADU financing—by integrating HUD-insured second liens, GSE securitization, and rental-income-based loan enhancements. This initiative seeks to speed up ADU construction and help ease the nationwide housing shortage while providing access to ADU financing for lower income and younger homeowners, opening up a new housing production to a wider audience.
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Jonathan Berk is an urbanist, placemaker, housing advocate, and the founder of reMAIN, a platform dedicated to advancing the development of missing middle housing in pedestrian-friendly neighborhoods. This platform supports the creation of infill housing by collaborating directly with municipalities, connecting strategic development sites with local developers and new funding sources, and helping communities achieve their stated housing objectives.
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