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USDA Rural Housing Service Finalizes Rule Allowing ADUs in Guaranteed Loan Program

A final rule amending the Single Family Housing Guaranteed Loan Program will permit financing of homes with income-producing accessory dwelling units, effective December 28, 2026.

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The Rural Housing Service (RHS), a Rural Development agency of the U.S. Department of Agriculture (USDA), has issued a final rule amending the regulations governing the Single Family Housing Guaranteed Loan Program (SFHGLP) to allow the financing of single family homes that include income-producing Accessory Dwelling Units (ADUs). The rule also clarifies the eligibility of properties with features designed to accommodate home-based operations using non-commercial real estate features. The rule amends 7 CFR 3555 and is effective December 28, 2026.

What the Rule Does

The final rule makes two distinct changes to the SFHGLP. First, it permits the program to finance single family homes that contain income-producing ADUs — a category of property previously addressed differently under the program's rules. Second, it clarifies how properties with features suited to home-based operations are treated for eligibility purposes, specifying that such features must be non-commercial real estate features. Both changes are reflected in amendments to 7 CFR Part 3555, which governs the SFHGLP.

The rulemaking touches a broad range of regulatory topics as identified in the final rule, including housing, credit, mortgage insurance, mortgages, low and moderate income housing, manufactured homes, home improvement, loan programs for housing and community development, grant programs for housing and community development, rural areas, fair housing, flood insurance, environmental impact statements, and reporting and recordkeeping requirements.

What to Watch

The rule carries a single key date: it becomes effective December 28, 2026. Lenders, borrowers, and program participants operating under SFHGLP should plan for the amended regulatory framework under 7 CFR 3555 to govern loan eligibility determinations as of that date.

What This Means for Recipients

State, local, and tribal governments, as well as consultants serving them, should note that as of December 28, 2026, the SFHGLP will permit guaranteed loan financing for single family homes that include income-producing ADUs — an eligibility expansion directly stated in the rule. Properties with home-based operation features remain potentially eligible, provided those features are non-commercial in nature, as the rule specifies. Parties advising rural housing borrowers or program administrators should update compliance guidance to reflect the amended 7 CFR 3555 standards ahead of the effective date.

Related

Sources

6 cited

Every hard fact above is grounded in and cited to a primary source record.

  1. The Rural Housing Service (RHS) is a Rural Development agency of the U.S. Department of Agriculture (USDA).

    federalregister.gov

  2. The final rule amends the Single Family Housing Guaranteed Loan Program (SFHGLP) regulation.

    federalregister.gov

  3. The rule permits the financing of single family homes with income-producing Accessory Dwelling Units (ADUs).

    federalregister.gov

  4. The rule clarifies the eligibility of properties with features designed to accommodate home-based operations using non-commercial real estate features.

    federalregister.gov

  5. The rule amends 7 CFR 3555.

    federalregister.gov

  6. The final rule is effective December 28, 2026.

    federalregister.gov

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