Accessory Dwelling Units (ADUs) in Pennsylvania: What Homeowners Need to Know

In the evolving housing market, one trend gaining serious momentum, especially in urban and suburban areas, is the rise of Accessory Dwelling Units (ADUs). Whether you’re a homeowner exploring new options or a buyer seeking flexibility and income potential, ADUs represent an exciting opportunity across the Keystone State.

What Is an Accessory Dwelling Unit (ADU)?

An ADU is a secondary, self-contained residential unit located on the same lot as a primary single-family home. These units typically include a separate entrance, kitchen, bathroom, and living space. You may know them as:

• In-law suites
• Granny flats
• Backyard cottages
• Garage or basement apartments

ADU vs. 2-Unit Property: What’s the Difference?

While a 1-unit property with an ADU may physically resemble a traditional duplex, there are important distinctions:

• A 2-unit property is typically designed and built as two similar-sized units at the same time.
• An ADU is often added later, is smaller, and may have zoning or permit restrictions that differ from multifamily properties.

Even though both can include separate entrances and utilities, an ADU is considered an extension of the main residence, not a separate legal unit in many areas.

Are ADUs Legal in Pennsylvania?

Yes, but it depends on your municipality.

In Pennsylvania, ADU regulations are highly localized. In Philadelphia, ADUs are allowed on lots with a single-family home in detached or semi-detached structures. Outside Philly, each township or borough has its own rules on:

• Size and square footage
• Zoning restrictions
• Permits and inspections
• Whether the ADU can be rented

📍Pro Tip: Always check your local zoning board or consult a real estate attorney before beginning construction or buying a property with an existing ADU.

Benefits of Adding or Buying a Property with an ADU

🏡 Multi-Generational Living

An ADU makes it easier to care for aging parents or accommodate adult children, while maintaining privacy for everyone.

💼 Income Potential

Many homeowners use ADUs as long-term rentals or short-term Airbnb properties. In some cases, rental income can help offset your mortgage or boost cash flow.

📈 Increased Property Value

A well-designed ADU may raise your home’s resale value and appeal to a broader pool of buyers.

🎯 Flexibility

Whether you use it as a guest suite, home office, or future rental, ADUs offer lifestyle flexibility that today’s buyers value.

How to Finance an ADU in Pennsylvania

Mortgage Guidelines for ADUs

Financing a home with an ADU, or adding one, comes with special considerations:

• FHA Loans: May allow ADUs but will closely evaluate safety, zoning compliance, and future rental income.
• Conventional Loans: Fannie Mae and Freddie Mac offer flexibility for homes with legal ADUs, especially if the unit is permitted and income-producing.
• Rental Income Use: Depending on the loan program, you may be able to use projected rental income from the ADU to help qualify.

Why Work With a Mortgage Broker for ADUs?

Because not all lenders view ADUs the same way.

At Innovative Mortgage Brokers, we work with over 30 lenders, giving us the flexibility to match your unique property with the right loan. Whether you’re:

• Buying a home with an ADU
• Refinancing to add one
• Exploring how rental income affects your DTI

…we’ll walk you through it clearly and honestly.

Why Homeowners Trust Us With ADU Financing

We’ve helped homeowners and investors throughout Pennsylvania and Florida finance properties with ADUs, even in areas with tricky zoning or layered loan guidelines.

When You Work With Us, You Get:

✅ Access to competitive mortgage options tailored for properties with ADUs
✅ Free credit consultation and honest advice from start to close
✅ Guidance through appraisal, zoning, and income documentation
✅ Clear answers, whether you’re a first-time buyer or experienced investor

Let’s Talk About Your ADU Strategy

Accessory Dwelling Units may not be for everyone, but for the right buyer or homeowner, they can be a game-changer, providing extra income, long-term flexibility, or a creative solution for multi-generational living.

If you’re thinking about buying a property with an ADU, or adding one to your current home, let’s run the numbers together.