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Annapolis committee advances ADU rule changes to allow FHA financing, keeps owner-occupancy requirement for short-term rentals
Summary
The Rules and City Government Committee approved amendments to O-15-25 removing the general owner-occupancy requirement for accessory dwelling units (ADUs) to allow FHA-eligible financing while preserving owner-occupancy for units used as short-term rentals; amendments also raised the size cap and eased utility hookup costs.
The Rules and City Government Committee on Oct. 13 approved changes to O-15-25 that remove the citywide owner-occupancy requirement for accessory dwelling units (ADUs) — a change intended to let more ADUs qualify for Federal Housing Administration (FHA) mortgage financing — while keeping an owner-occupancy rule for ADUs used as short-term rentals.
Sponsor Alderman Schandelmeyer described the change as necessary after FHA policy updates in 2023 that allow ADUs to qualify for FHA loans but bar eligibility in jurisdictions that retain rental restrictions such as owner-occupancy mandates. "It comes down to in order to make the financing of this more flexible for the FHA loans, which are the easiest loans for people to get, we need to do this," Schandelmeyer said.
The committee also approved two other sponsor amendments. Amendment 1 raised the allowable accessory unit floor area from the current 850 square feet to…
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