Bill Proposes Higher Loan Limits for Home Improvements, ADUs, and Manufactured Homes

This proposed legislation, the "Property Improvement and Manufactured Housing Loan Modernization Act of 2025," aims to update key parts of the National Housing Act. It significantly increases the maximum amounts people can borrow under Title I for fixing up their homes or buying manufactured housing, and it explicitly adds constructing Accessory Dwelling Units (ADUs) – think backyard cottages or basement apartments – as a permitted use for these property improvement loans.

Bigger Budgets for Renovations and ADUs

If you've been thinking about a major home renovation or adding a small rental unit, this bill could make financing easier. It proposes raising the government-insured loan limit for improvements on existing single-family homes to $75,000, up from previous levels. For multi-family properties, the limit would jump to $150,000 total, capped at $37,500 per unit. Crucially, the bill clarifies that these funds can be used for "construction of additional or accessory dwelling units." This directly addresses the growing interest in ADUs as a way to add housing supply or generate rental income. The bill also suggests extending the maximum loan repayment term to 30 years, potentially lowering monthly payments compared to shorter terms.

A Boost for Manufactured Housing

The legislation also gives a significant bump to loan limits for manufactured homes, often a more affordable path to homeownership. Under the proposal, the limit for buying just the home would increase to $106,405 for a single-section unit and $195,322 for a multi-section one. If you're buying the home and the lot, those limits rise to $149,782 (single-section) and $238,699 (multi-section). There's also a specific increase for energy-saving upgrades or solar energy systems, raising that loan limit to $43,377. These changes could make financing manufactured homes more accessible for buyers.

More Flexibility for HUD (and a Homework Assignment)

Beyond the numbers, the bill grants the Secretary of Housing and Urban Development (HUD) more flexibility. Instead of going through the formal regulation process, the Secretary could adjust these loan limits periodically using a simpler "notice" procedure, provided there's justification. The Secretary also gains authority to set specific loan amounts for ADU construction and modify lease term requirements. While this could make the program nimbler, it also means changes might happen with less formal public input. To keep pace with costs, the bill requires HUD to develop or adopt a method for annually indexing these loan limits within one year. Finally, HUD is tasked with studying the cost-effectiveness of factory-built housing (like manufactured and modular homes) compared to traditional construction, looking at everything from manufacturing savings to long-term maintenance costs.