DSCR loans for Washington homes with an ADU or DADU
TL;DR: A Washington house with a legal accessory dwelling unit (ADU) or detached backyard cottage (DADU) can often be financed with a DSCR loan, and some lenders count rent from both units. The accessory unit must be legally permitted for the lender to rely on its rent, and neither you nor a family member can live in either unit.
Washington cities, Seattle first among them, have made accessory units much easier to build. For investors, a second rentable unit on the lot is one of the cleanest ways to improve the ratio.
Who it fits
- Seattle and Eastside investors who need two rents to reach the ratio
- Owners who have added a permitted backyard cottage
- Buyers of houses with a legal basement or garage unit
- Investors in Tacoma, Olympia and Spokane neighborhoods where ADUs are common
How the math looks
A Seattle house rents for $3,200 and its permitted DADU for $1,900, a combined $5,100. The full payment is $5,000.
$5,100 ÷ $5,000 = a DSCR of about 1.02. Without the DADU rent, $3,200 ÷ $5,000 = 0.64.
The accessory unit is the difference between a ratio that works and one that does not.
Illustrative numbers you would replace with your own. Not a loan offer or a quote of terms.
How it works
Confirm permitting
Pull the permit history to show the ADU or DADU is legal; unpermitted units usually cannot count.
Document both rents
Leases on both units, or market rent support for each.
We find programs that count both
Wholesale lenders differ on how much accessory-unit rent they include; we shop for the ones that fit.
Appraisal
The appraiser values the property with its accessory unit and estimates market rent.
Close
The lender underwrites and funds the loan on the whole property.
What lenders will look for
- Permit records for the accessory unit
- Separate leases or market rent for each unit
- Appraiser comparables with similar accessory units
- Signed non-owner-occupancy statements covering both units
Washington watch-outs
- Some programs count only part or none of the accessory unit’s rent
- Unpermitted units can hurt both value and the ratio
- Seattle STR rules limit nightly rental of a second unit by non-residents
- You cannot live in the main house or the accessory unit
Questions investors ask
Can I finance a property with an ADU or DADU on a DSCR loan?
Often. It comes down to the lender’s rules for counting rent from the accessory unit and on its legal permitting status. You cannot live in either unit.
Does an unpermitted basement apartment count?
Usually not. Lenders and appraisers generally need the unit to be legal before they credit its rent or value.
Can I build an ADU after closing and refinance later?
Yes, many investors do. Once the unit is permitted, finished and leased, a rate-and-term or cash-out DSCR refinance can count the new rent.
Other Washington DSCR options
Have a Washington rental in mind?
Send the scenario once. We shop business-purpose DSCR programs from wholesale lenders and come back with the options that fit the property, west or east of the Cascades.