Hello ARLO,California state law allows ADUs to be added to multifamily homes regardless of zoning. I have a reverse mortgage on a duplex and need to convert a portion of my unit into a separate space for a personal caregiver. This space would include a kitchen and bathroom. To do this legally, I will need to obtain a permit and a certificate of occupancy from the city. I would use the other part of the duplex for the caregiver, but in California, that is not a legal reason to evict a tenant. Would this be allowed under HUD guidelines? If not, do you have any suggestions? Given the housing crisis, many states and municipalities now permit ADUs in multifamily properties or allow multiple ADUs in single-family homes, effectively eliminating former single-family zoning restrictions. Additionally, the original purpose of a reverse mortgage was to help homeowners remain in their homes for life unless extreme disability made that impossible. Thank you for any guidance on how I might move forward.
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Michael G. Branson, CEO of All Reverse Mortgage, Inc., and moderator of ARLO™, has 45 years of experience in mortgage banking, with the past 20 years devoted exclusively to reverse mortgages. A Forbes Real Estate Council member, he developed the industry's first fixed-rate jumbo reverse mortgage and has been featured in Forbes, Kiplinger, the LA Times, and Yahoo Finance. (License: NMLS# 14040) |
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Cliff Auerswald, President of All Reverse Mortgage, Inc., and co-creator of ARLO™ — the industry's first real-time reverse mortgage pricing engine — has 27 years of experience in mortgage banking, with 20+ years focused exclusively on reverse mortgages. A recognized expert in reverse mortgage technology and consumer education, he has been featured in Kiplinger, Yahoo Finance, Realtor.com, and HousingWire. (License: NMLS# 14041) |
Michael G. Branson
Edited by 
Cliff Auerswald
Hello Val,
Under current HUD guidelines, properties with Accessory Dwelling Units (ADUs) on multifamily homes are not eligible for a reverse mortgage.
While California and other states have updated their laws to allow different building configurations, these changes do not automatically affect HUD’s eligibility requirements. There are many cases where state laws permit housing modifications that HUD still considers ineligible for FHA-insured reverse mortgages.
A change in state law allowing ADUs does not, by itself, convince HUD to insure reverse mortgages on such properties. HUD evaluates these scenarios based on their perceived risk and determines eligibility accordingly.
That said, HUD periodically revises its rules in response to policy shifts and legislative pressure.
Potential Next Steps:
You may consider contacting your Congressperson or U.S. Senator to request their support for a policy change at HUD. If enough homeowners advocate for ADU-related updates, HUD may reconsider its stance in the future.
In the meantime, if your primary goal is to accommodate a caregiver, you might explore alternative loan options that do not fall under HUD’s reverse mortgage program.
For more details, see:
HUD Single-Family Housing Policy Handbook
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