USDA Loans Now Finance Rural Homes with Rental Add-Ons
Published Date: 3/31/2026
Proposed Rule
Summary
The USDA’s Rural Housing Service wants to update its loan program so people can get loans to buy homes with one or more income-producing Accessory Dwelling Units (ADUs). This means homeowners can finance properties that include rental units or spaces for home-based work. If you’re interested, make sure to send your comments by June 1, 2026!
Analyzed Economic Effects
3 provisions identified: 3 benefits, 0 costs, 0 mixed.
Finance Homes With Income-Producing ADUs
The USDA Rural Housing Service proposes to allow its Single Family Housing Guaranteed Loan Program to guarantee loans when funds are used to finance a single or multiple income-producing Accessory Dwelling Units (ADUs). The proposal updates 7 CFR 3555.102(b) and 7 CFR 3555.201(b)(2) so properties that include or will include income-producing ADUs can be eligible for guarantees.
Allow Financing For Home-Based Businesses
The Agency proposes to permit guarantees for otherwise qualifying single-family properties that contain design features to accommodate home-based businesses, such as childcare, product sales, or craft production, so long as they do not require commercial real estate features. This change revises 7 CFR 3555.102(c) to clarify eligibility for properties used for non-commercial home-based operations.
Formal ADU and Living Unit Definitions
RHS proposes to add formal definitions for 'Accessory Dwelling Unit' and 'Living Unit' to 7 CFR 3555.10. The Living Unit definition lists minimum requirements such as potable water, sanitary facilities, heating, electricity, at least one bathroom (water closet, lavatory, tub or shower), and kitchen or kitchenette facilities.
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Key Dates
Department and Agencies
Related Federal Register Documents
2026-05387, Single Family Housing Guaranteed Loan Program
The USDA’s Rural Housing Service is updating its Single Family Housing Guaranteed Loan Program to let approved lenders use automated systems for making loans and getting guarantees after closing. This change helps speed up the loan process for folks buying homes in rural areas. The new rules kick in June 17, 2026, with full use starting September 28, 2028, making it easier and faster for lenders and homebuyers alike.
2026-20022, Revised Fee Structure for Section 538 Guaranteed Rural Rental Housing Program Initial and Annual Guarantee Fees
Starting September 30, 2026, the USDA’s Rural Housing Service is updating the fees for its Section 538 Guaranteed Rural Rental Housing Program. This change affects lenders and developers working on rural rental housing projects by adjusting the initial and annual guarantee fees they pay. The new fee structure helps keep the program running smoothly while supporting affordable rural housing.
2026-19659, Multifamily Housing Preservation Pilot and Multifamily Housing Guaranteed Loan Notice of Loan-to-Cost Percentage Change for Option 3 (Continuous Guarantee)
The USDA’s Rural Housing Service is launching a pilot to make it easier and faster to preserve affordable rural rental housing by changing rules for loan transfers and guarantees. This affects owners and residents of multifamily housing, especially those using Low Income Housing Tax Credits or guaranteed loans. The pilot starts now and aims to cut red tape, speed up transfers, and protect these homes for the long haul.
2026-16914, Rescission of Rural Development's Construction and Repair Regulation
The Rural Business-Cooperative Service (RBCS), Rural Housing Service (RHS), and Rural Utilities Service (RUS), together make up the Rural Development (RD or the Agency) mission area within the U.S. Department of Agriculture (USDA). RD is issuing this proposed rule to rescind its regulation regarding construction and repairs. RD found this regulation to be unnecessary and unduly burdensome. In addition, it makes changes to RBCS regulations by removing references to the construction and repair regulations. The plain language summary of the proposal is available on Regulations.gov in the docket for rulemaking.
2026-13455, Direct Multifamily Housing Subsequent Loans for Acquisition
The USDA’s Rural Housing Service wants to make it easier for owners of USDA-financed apartment buildings to get extra loans for buying those properties again. This change cuts red tape and helps keep affordable housing in good shape. If you’re involved, get your comments in by August 31, 2026, to have your say!
2026-13397, Notice of Recission of Funding Opportunity for the Rural Community Development Initiative (RCDI) for Fiscal Year 2025
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