What’s the SUPPLY Act?
On July 18, 2025, Representatives Sam Liccardo (D‑CA) and Andrew Garbarino (R‑NY) introduced the Supporting Upgraded Property Projects and Lending for Yards (SUPPLY) Act (H.R. 4568). The bipartisan legislation aims to empower homeowners to build accessory dwelling units (ADUs)—such as backyard cottages, in-law suites, or garage apartments—by offering a government-backed second mortgage option for construction financing (HousingWire).
Why it matters
The U.S. faces a housing shortage exceeding four million units, with nearly one-third of households spending more than 30% of their income on housing (The Wall Street Journal, Straight Arrow News). While ADUs are gaining traction as flexible, lower-cost housing solutions, most are currently built by affluent homeowners financing them through savings or home equity loans. The SUPPLY Act seeks to open up these financing pathways to younger and modest-income homeowners who lack sufficient home equity (The Wall Street Journal).
How the Act works
- HUD backing for second mortgages: The Department of Housing and Urban Development (HUD) would insure second-lien loans taken out specifically for ADU construction, dramatically reducing lender risk and unlocking capital for homeowners (Scotsman Guide).
- Securitization support: The bill authorizes Fannie Mae and Freddie Mac to purchase and package these loans, improving lender liquidity and potentially expanding access to credit further (The Wall Street Journal).
Backing from industry groups
Major housing and lending groups have endorsed the bill, highlighting its potential to boost ADU development and alleviate broader affordability issues:
- Mortgage Bankers Association (MBA)
- National Association of Home Builders (NAHB)
- State credit union leagues (e.g., California, Nevada), which see ADUs as lending opportunities for their members (HousingWire)
Casita Coalition, a California nonprofit focused on ADU expansion, praised the legislation as a practical way to break down financing barriers—especially for multi-generational and lower-income households (San José Spotlight).
What’s next
Beyond financing, ADU growth still hinges on local zoning reform and streamlined permitting. While the SUPPLY Act removes a major financial hurdle, critics note obstacles such as variances in building codes, neighborhood resistance, and cost recovery (construction vs. rental income) remain key challenges (The Wall Street Journal).
State-level examples (like California) show that reducing red tape can spark rapid ADU adoption: during Liccardo’s tenure as mayor of San José, nearly 1,000 ADU permit applications were submitted in a single year once regulations were relaxed (San José Spotlight).
How this impacts you
- For homeowners: This bill could turn your backyard dreams into reality—without draining your savings or tapping heavily into existing home equity.
- For community advocates: ADUs offer a scalable, decentralized pathway to expand housing supply—especially important in dense or rapidly growing areas.
- For policy watchers: The SUPPLY Act could pressure local governments to modernize zoning laws, aligning federal incentives with local-level policy reforms.
Quick snapshot
| Feature | SUPPLY Act (H.R. 4568) |
|---|---|
| What’s offered | HUD-backed second mortgages for ADU building |
| Financial intermediaries involved | Fannie Mae, Freddie Mac, private lenders |
| Target homeowners | Younger, modest-income, low-equity homeowners |
| Housing benefit | Potential new affordable homes in existing neighborhoods |
| Major support | Mortgage Bankers Assoc., NAHB, credit unions, Casita Coalition |
Final word
If passed, the SUPPLY Act could be a game-changer—turning underutilized yards into housing opportunities. But it’s worth remembering: financing is only one piece of the ADU puzzle. Rezoning, construction costs, and permitting still matter. For homeowners navigating this landscape, the SUPPLY Act represents a hopeful sign that backyard housing may soon be more than just a dream—it could be a federally supported reality.
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