Using ADU, DADU or Duplex Rental Income to Qualify Under HB 1110 in Washington
Updated October 2026
A backyard cottage in Tacoma or a duplex near Seattle can help offset housing costs, but zoning capacity is not qualifying income. Before making a Washington house-hacking offer, establish what legally exists, how the appraiser will classify it and which rental-income rules the proposed mortgage uses.
Separate middle housing from accessory units
HB 1110 expands middle-housing requirements in covered jurisdictions, subject to implementation rules and local conditions. Washington’s companion ADU legislation, including HB 1337, addresses accessory dwelling units more directly. Neither law automatically approves a particular lot, construction plan or rental projection.
An ADU is accessory to the primary residence; a DADU is detached. A duplex is generally a two-unit property. Those distinctions affect appraisal forms, loan limits, underwriting and insurance.
Before counting rent, obtain:
- Permit history and final approval for the existing unit.
- Confirmation of lawful residential use and relevant restrictions.
- Separate utility, access and maintenance arrangements where applicable.
- Existing leases and evidence of actual rental operations.
- An appraisal-supported market-rent estimate when required.
A finished garage with a kitchenette is not automatically an eligible ADU. Space advertised for short-term guests may also produce income that the chosen mortgage program will not recognize.
Translate gross rent into qualifying income
Lenders often use only a portion of eligible gross rent to account for vacancy and expenses. A 75% factor is common in certain conventional scenarios, but it is not a universal approval rule. Lease documentation, rental history, reserve requirements and limits on ADU income vary by program.
For example, $2,000 of eligible monthly rent might contribute $1,500 before other underwriting adjustments. Do not assume that amount increases your borrowing power dollar for dollar. Proposed future construction may require a different financing structure entirely.
The 2026 one-unit baseline conforming limit is $832,750 in many Eastern and Central Washington counties; eligible two-unit properties have separate limits. King, Snohomish and Pierce have higher one-unit ceilings exceeding $1,035,000. Verify the applicable unit count and county through FHFA Loan Limits.
Test ownership costs without perfect occupancy
Use the monthly payment calculator to model the full mortgage, then separately budget repairs, utilities, insurance and vacancy. Washington has no general state personal income tax, but rental operations still carry federal tax and local operating considerations.
Review purchase planning with the Consumer Financial Protection Bureau. If conversion work is essential, compare the renovation financing guide before assuming a standard purchase loan will fund an unfinished second unit.
Compare Current Mortgage Rates
Compare current APRs, points, fees, and estimated monthly payments from participating lenders below.
Loan Program Comparison: 2026 Benchmarks
Using ADU, DADU or Duplex Rental Income to Qualify Under HB 1110 in Washington — Choose a mortgage by comparing eligibility, upfront cash and total monthly costs, not the advertised rate alone. Conventional, FHA, VA and USDA serve different borrowers. Confirm county limits, taxes, insurance and lender requirements before comparing personalized Loan Estimates for your household.
Historical 2025 one-unit comparison: conforming $806,500; FHA floor $524,225. County and unit-count limits can differ.
| Loan program | Down payment / equity | 2026 one-unit baseline | Costs and page-specific comparison |
|---|---|---|---|
| Conventional | 3%–5% subject to eligibility | $832,750 | PMI generally below 20% down |
| FHA | 3.5% at 580+; 10% at 500–579 | $541,287 floor | 1.75% upfront MIP; 0.55% annual for >95% LTV, base loan ≤$726,200, term >15 years |
| VA | 0% for eligible borrowers | No VA limit with full entitlement | No monthly PMI; funding fee unless exempt |
| USDA | 0% for eligible borrowers | Income, address and repayment eligibility | Guarantee and annual fees; confirm current schedule |
| Jumbo | Lender-specific cash and reserves | Above applicable conforming limit | Lender-specific pricing and insurance |
| Home Equity / Refinance | Equity and underwriting dependent | Property and lender dependent | Compare closing costs, term and break-even |
Sources: FHFA limits; HUD FHA limits.
Editorial Methodology & Primary Sources
Verification date: Not recorded; check the primary source and lender timestamp before relying on an estimate.
Rate comparisons use participating lender feeds, not a whole-market survey or guaranteed offers. Freddie Mac PMMS is a market benchmark, not a personalized quote. Calculator models rely on published regulatory formulas and disclosed assumptions rather than fabricated first-person loan testing.
Monthly principal and interest use the amortization formula P × r / (1 − (1 + r)−n), where r is the monthly note rate and n is the number of payments; at zero interest use P / n. PITI adds monthly property taxes and homeowners insurance; PMI is separate. APR includes applicable finance charges under Regulation Z and is not the note rate used for payments. Compare lender Loan Estimates for actual APR and fees.
- Consumer Financial Protection Bureau (CFPB) — Loan Estimates, APR and borrower disclosures; Regulation Z.
- U.S. Department of Housing and Urban Development (HUD / FHA) — FHA program guidance.
- U.S. Department of Veterans Affairs (VA) — VA loan eligibility and benefits.
- Freddie Mac Primary Mortgage Market Survey (PMMS) — published rate benchmarks.
- U.S. Census state tax collections — state property tax benchmarks; confirm parcel-specific assessments and exemptions with the state revenue department and local assessor.
The payment snapshot uses illustrative annual taxes of 1% of home price, $1,200 insurance and 0.5% PMI below 20% down, not verified local quotes. Other calculators disclose their inputs and assumptions. Published guidance and lender feeds may change independently; confirm current program rules, taxes and offers before a decision.