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ReferenceUSDA ADU loan glossary
Federal housing rules come with their own vocabulary. These are the terms you'll run into when reading about the USDA ADU rule, explained in plain English and linked to the official source where one exists.
The property
- Accessory dwelling unit (ADU)
- A secondary home on the same property as a single-family house, such as a detached guest house, a garage apartment or an attached in-law suite. USDA's 2026 rule adds a formal definition of "Accessory Dwelling Unit" to 7 CFR 3555.10.
- Living unit
- Under the rule, a space with potable water, sanitary facilities, heating, electricity, at least one bathroom, and a kitchen or kitchenette. This is the practical test for whether a space counts as somewhere a person can live. See the full requirements.
- Income-producing ADU
- An ADU that earns rental income. Under the old Guaranteed Loan rules, a home was ineligible if its ADU had produced rental income, even if the buyer wouldn't rent it. The 2026 rule allows homes with one or more income-producing ADUs.
- Potable water
- Water that is safe to drink. It's one of the six features a living unit must have under the rule.
- Sanitary facilities
- The facilities that handle wastewater and sanitation. Another of the six required living unit features.
- Kitchenette
- A small kitchen. The rule requires a living unit to have a kitchen or a kitchenette, so a full kitchen isn't required.
- Home-based business features
- Features of a home that support a business run from it, such as childcare, product sales or crafts. The rule says homes with these features can remain eligible if they don't require commercial real estate features.
- Commercial real estate features
- Property features needed for commercial use rather than residential use. A home that needs them to support a business falls outside the home-based business allowance.
The program
- Single Family Housing Guaranteed Loan Program
- The USDA program the ADU rule amends. Private lenders make the loans and USDA guarantees them. USDA program page.
- Loan guarantee
- USDA's promise to cover part of a lender's loss if a guaranteed loan isn't repaid. The guarantee is what allows lenders to offer loans on the program's terms.
- Direct loan program
- A separate USDA program in which USDA lends to the borrower itself. The ADU rule doesn't describe changes to the direct loan program.
- Rural Housing Service (RHS)
- The agency within USDA Rural Development that runs USDA's single-family housing programs and published the ADU rule.
- USDA Rural Development
- The USDA mission area that includes the Rural Housing Service. Its website hosts program pages, handbooks and the lender list.
- USDA-approved lender
- A bank, credit union or mortgage company approved to make Guaranteed Loans. USDA publishes an active lender list.
- HB-1-3555 (technical handbook)
- USDA's technical handbook for the Guaranteed Loan Program, used by lenders and USDA staff to apply the regulations day to day. Details such as how ADU rental income is treated are expected to come through this kind of guidance. USDA handbooks.
The rulemaking
- Federal Register
- The daily publication of the U.S. government where agencies publish proposed rules, final rules and notices. The ADU proposal appeared there on March 31, 2026, as FR Doc. 2026-06173.
- 7 CFR Part 3555
- The section of the Code of Federal Regulations that contains the Guaranteed Loan Program's rules. Section 3555.10 holds its definitions, where the rule adds "Accessory Dwelling Unit" and "Living Unit". Read it on eCFR.
- Proposed rule
- A draft regulation published for public comment before it's finalized. USDA proposed the ADU change on March 31, 2026.
- Comment period
- The window when anyone can submit comments on a proposed rule. For the ADU rule it closed on June 1, 2026. The National Association of REALTORS® filed comments supporting it.
- Docket number and RIN
- Tracking identifiers for a rulemaking. The ADU proposal is filed under docket RHS-26-SFH-0100 and Regulation Identifier Number (RIN) 0575-AD45.
- Final rule
- The finished regulation, published after the agency reviews comments. USDA published the ADU final rule on October 29, 2026.
- Effective date
- The date a final rule starts to apply. For the ADU rule, it's December 28, 2026.
Eligibility
- Property eligibility
- Whether a property's location is in an area eligible for Guaranteed Loans. Check an address on USDA's official eligibility site.
- Income eligibility
- Whether a household's income is within the program's limits, which vary by location and household size. USDA's income tool on the same site gives the current answer for an area. How to check eligibility.
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