A Shared Middle Housing Agenda

Affordable, accessible financing is essential to scaling ADUs and middle housing. Current lending tools were built for single-family or large multifamily projects—leaving a critical gap in the market that would facilitate homeowners and developers’ ability to build middle housing. To fill the gap, we need targeted financial innovations that expand who can build these homes and how they get built.

Adapt 

• Pass congressional bill to allow detached units/ADUs as eligible improvements for 203k

• Support the passage of bills that Increase FHA Title I and Title II loan limits for manufactured homes/ADUs (introduced in U.S. Senate August 2025)

• Solve appraisal issues with limited comps for new housing types

• Finance improvements/incentives for ADU Condo development for lower-cost  homeownership. Identify barriers for developers

• New home construction deposit reform (state level). Allow 20%, protected by performance bond

• Establish a dataset of performance for FHFA loans that included ADU rental income as part of qualifying borrower income

Innovate 

• Establish primary and secondary market for second liens for additional units, supported by:

  • Loan guarantee fund to support ADU lending

  • Private loan fund pool for low-cost ADU loans

• Create insurance product aimed to guarantee projected income. Might be combined with a completion guarantee policy

• Spur the creation of shared equity and shared appreciation loans. Identify best practices to protect consumers

Educate 

• Create a model ADU loan template (for second lien products) that:

  • Repays borrower for pre-development costs

  • Allows projected rental income to help borrowers qualify

  • No affordability requirements (or max of 5-7 years /consider rent caps that balance NOAH (naturally occurring affordable housing) and debt service needs of the owner)

  • Allows all types of ADUs

  • Extends construction timeline if needed

• Highlight successful partnerships obtaining scale for lower-cost ADU development (combining private social impact loan pool, nonprofit for education and project management, manufactured ADU builder, property mgmt)

Fund

• Encourage state and federal budget funds to support programs that incentivize production of ADUs and middle housing (I.e. Cal HFA ADU Grant program, New York’s Plus One ADU program, Colorado’s grants to ADU Supportive Districts)

To make middle housing feasible and reduce rent burdens, we must modernize outdated permitting, financing, and regulatory systems at the national and federal levels. Lowering development costs—especially for manufactured and factory-built homes—can unlock more affordable rentals and ownership options for those shut out by today’s high prices and limited housing choices.

Fund and incentivize production of attainable middle housing

• Support reforms that allow middle housing to be built under residential code instead of commercial code

• Create parity in tax code between building for rental and for sale projects

• Encourage tax credits for homeowners who build middle housing

• Improve construction financing options in GSEs

• Encourage reuse of decommissioned federal land/properties with priority for urban/infill projects

• Incentivize infill and smart growth middle housing solutions

Expand how and where factory-built homes can be placed

• Support passage of bill that Improves options for chassis removal on HUD-code manufactured homes (Introduced in U.S. Senate August 2025)

Educate 

• Highlight success stories from innovators using lower-cost building systems, collaborations and finance models that lower the cost of homes

Support efforts to enact effective statewide by-right middle housing law across the country. 

Enact

• By-right allowances and baseline standards for ADUs, plexes, townhouses and cottage courts

• Expand the number of states that have effective statewide ADU policies as a critical first step to zoning reform

• Reduce minimum lot sizes and home sizes for primary homes

• Establish fee-simple streamlined lot divisions to create ownership opportunities for middle housing

• Enact by-right allowances for multifamily residences in commercial zones, on faith-based and school-owned properties

• Permit reform and moving plan-compliant projects to by-right

• Do clean up of existing statewide ADU plans that include poison pills that hinder production

• Share best practices for local development and design standards that support, rather than hinder, factory-built ADUs and homes—ensuring they are feasible and not unreasonably restricted

Mentor

• Ensure middle housing advocates and policymakers from around the country are connected to ensure support and mentorship in  reform efforts

• Assess and identify poison pills in current state laws that restrict production of ADUs and middle housing; work with local stakeholders on strategies to improve

• Help advocates identify local political and policy barriers to middle-housing goals

Convene

• Gather broad range of stakeholders at regular convenings to share solutions, align messaging and shorten reform timelines

Share Resources

• Conduct roundtables and webinars to support effective middle housing reform

• Share data showing ADU and middle housing benefits 

• Share model codes and model legislation for middle housing. Share models for simplified, streamlined land divisions and other options that achieve smaller lot sizes with more affordable homes

Highlight Successes

• Share ecosystem successes where reforms have resulted in boosted housing supply and lower housing cost burdens

Exclusionary zoning, high costs, an underbuilding of starter homes and stagnant wages have made homeownership out of reach for many. These initiatives aim to remove zoning barriers and lower development costs to expand access to affordable homeownership supply —especially for those historically locked out.

Remove regulatory and legislative barriers to attainable homes for purchase

• Address first generation zoning barriers that limit townhouses, cottage courts, plexes, ADU condos, and other middle housing development that is needed to create a supply of attainable homes for purchase

• Improve and simplify small lot subdivision options and condo mapping processes

• Establish by-right division of homes into multiple units

Expand finance options for owners and developers

• Development finance for owners

• Improve options for commercial finance for developers of ADU condo projects

• Deposit reform/capital stack/equity for middle housing developments

• Shared equity loans for building

Lower development costs to reduce selling prices

• Assess layers of regulatory requirements that lengthen timelines and increase costs; develop plan for relieving this burden

• Support capital gains exemption for selling residential properties to owner-occupant buyers

• Standardize calculations for Quimby Act and Mitigation Fee Act to use unit square foot basis, with thresholds for fewer unit counts allowed (ex: no inclusionary fees/impositions at 5 units or below.)

• Establish parity for developments for homeownership and rental use at state and local levels to remove disincentive for developers of ownership homes

• Support naturally affordable and below-market-rate affordable

• Exempt middle housing sales from capital gains if sold to owner-occupant

Address insurance challenges

• Identify and share resources to address current insurance barriers for homeowners building and renting ADUs

• Explore federal insurance stopgap

Encourage state and federal funding support and incentives

• Support first-time homebuyer incentives, tax credits and other funding that encourages middle housing for attainable homeownership

Highlight successful starter home programs

• Highlight program design best practices and results from successful efforts

We continue to identify strategies that encourage market-driven middle housing solutions to create attainable homes for purchase and rental without public funding.

Build the Market

• Consistent zoning rules across regions reduce costs and support industry growth. In areas with clear state laws allowing middle housing, small and emerging developers are building infill projects that expand attainable housing options.

• Factory-built home builders (including prefab and manufactured homes) are a market-based solution that can scale quickly and deliver homes faster and at less cost, if regulatory obstacles are removed.

Build Capacity

• Education for new developers and other middle housing professionals can improve outcomes for homeowners.

Unlock Production

• Expedited and over-the-counter building permits are critical to support homeowners, contain costs, and accelerate home deliveries and should widely replace discretionary reviews, multiple hearings and other burdensome steps.

• Bonus incentives for middle housing development projects that allow added units or modified standards make projects more likely to pencil.

• Reduced parking requirements outside of transit areas cut costs.