Homeownership 101

Selling a Dallas home with an ADU: how to get credit for the second unit

Jeff Updike & Weston Pugh · Dave Perry-Miller Real Estate · Updated October 2026

A guest house, a garage apartment or a backyard cottage can be the feature that sells your home. It can also be the thing that stalls the appraisal, if nobody can show how it was approved.

Buyers love a second unit for a parent, an office or a tenant. Whether they will pay for it depends on three people you will never meet: the appraiser, the buyer’s lender and the buyer’s attorney or title company reading your paperwork. Here is how each of them looks at an ADU, and how to get ready before you list.

Start with how it was approved

Everything else follows from this. In Dallas single-family zoning, a second unit is generally approved one of three ways, and only two of them allow renting:^1,2

How it was approved	Can the buyer rent it?	What the buyer inherits
Accessory Dwelling Unit Overlay	Yes	Owner must live on the property during a tenancy; rental registered with the city; the unit can never be sold separately1
Board of Adjustment: rentable accessory dwelling unit	Yes	A recorded deed restriction requiring owner occupancy, and annual rental registration2
Board of Adjustment: additional dwelling unit	No	A recorded deed restriction against using the unit as rental accommodations2

Dallas Ordinances 30931 and 30930, adopted 27 June 2018. Other zoning districts, planned developments and units built before current zoning can have their own rules.

Deed restrictions are recorded, so the buyer’s title company will find them. Better that your listing tells the same story first. Pull the permits, final inspections and any Board of Adjustment decision now, while there is time to fix a gap.

How the appraiser counts it

Most buyers finance, so the appraisal sets the ceiling on what most of them can pay. For a conventional loan sold to Fannie Mae, a detached ADU’s square footage is not added to the main house’s living area. The appraiser reports it on a separate line and adjusts for it there. A unit inside the main house, with interior access and above grade, is the exception.³

Legal status matters too. Fannie Mae treats an ADU as legal if current zoning allows it, recognizes that some units predate the zoning and are legal nonconforming, and allows only one ADU on a one-unit property. A unit that zoning does not allow can still be eligible, but only if specific appraisal and insurance requirements are met.⁴ Where work was done without permits, the appraiser has to comment on its quality and its effect on value.³

A permitted unit with a paper trail appraises as a feature. An undocumented one appraises as a question.

The rent can help your buyer qualify

This is the newer reason an ADU can widen your pool of buyers. Since October 2025, Fannie Mae has allowed lenders to count rental income from one ADU on a one-unit principal residence, up to 30 percent of the borrower’s total qualifying income.⁵ FHA has treated a home with a single ADU as a one-unit property since 2023, also with a 30 percent cap; with no rental history, the lender uses 75 percent of the lesser of the appraiser’s market rent or the lease.⁶ Freddie Mac also allows ADU rent as qualifying income when the unit is legal, legal nonconforming or in an area without zoning.⁷

That rent only counts if it is allowed and documented. If your unit can be rented, have the lease, the city rental registration and a record of rent received ready to share. If it is deed restricted against rental use, do not market rental income at all.

What to disclose

The Texas Seller’s Disclosure Notice, now TREC form 55-1, asks about room additions, structural modifications or other alterations made without necessary permits, and about notices of violations of deed restrictions or governmental ordinances affecting the condition or use of the property.⁸ If the unit was built or converted without permits, or you have received a city notice about it, say so. For the rest of the form, see the Seller’s Disclosure Notice.

How to market it honestly

• Describe the unit separately. Give its own square footage, bedrooms and kitchen, rather than folding it into the main house’s size.
• Call it what the city calls it. “Permitted guest quarters, approved by the Board of Adjustment” reassures a buyer more than “income suite.”
• Do not promise Airbnb income. Dallas’s 2023 ban on short-term rentals in single-family neighborhoods is blocked while the city’s appeal sits with the Texas Supreme Court, and the last brief was filed on 14 October 2026.^9,10
• Stage it for more than one buyer. The same room can be a mother-in-law suite, a studio or a home office. Show at least one of them.

If someone lives in it

Tell us early. A tenant affects how and when we can show the unit, what you can promise about possession at closing, and what the buyer will need to see. Gather the current lease, the deposit amount and the rental registration before you list, and talk with a real estate attorney if the lease runs past your expected closing date.

Quick answers

This page explains how accessory dwelling units are generally treated when a Dallas home is sold, as of October 2026. It is not legal, tax, lending or appraisal advice; we are not attorneys, lenders or appraisers. Zoning, short-term rental rules and loan guidelines change, and the rules for a specific lot depend on its zoning and history. Nothing on this page is a valuation of a specific property. Jeff Updike and Weston Pugh are licensed Texas real estate agents with Dave Perry-Miller Real Estate. Equal Housing Opportunity.