The Bottom Line
For homeowners who want to buy their next home while keeping their current home as a rental, qualifying for the new mortgage has historically presented a challenge.
Even if the homeowner planned to rent their current property, lenders could not necessarily use that future rental income to offset the existing mortgage payment without a qualifying lease already in place.
That could create an awkward timing problem.
You may need the rental income to qualify for the new home, but you may not want to find a tenant and sign a lease before you know where you are moving.
Fannie Mae just announced an important change that could make that process significantly easier.
Under its new framework for departing residences, qualifying borrowers may be able to use market-supported rent rather than having a lease agreement in place.
For the right move-up buyer, this could be a big deal.
Key Takeaways
- A Lease May No Longer Be Required: Fannie Mae’s new departing residence guidelines allow qualifying rental income to be based on market-supported rents rather than requiring a lease agreement.
- Market Rent Can Help Offset the Existing Mortgage: Depending on the borrower’s scenario, documented market rent may be used to help offset the principal, interest, taxes, insurance, and association dues, commonly referred to as PITIA, on the departing residence.
- This Could Help Buyers Keep Their Current Home: Homeowners interested in converting their current primary residence into a rental may have more flexibility when qualifying for their next home.
- It Could Help With Buy-Before-You-Sell Scenarios: For some buyers, the change could make it possible to qualify for a new home without first selling or leasing their current residence.
- There Are Still Requirements: This is not simply a matter of looking up an estimated rent online. Fannie Mae’s new framework includes requirements surrounding market-supported rents, reserves, property eligibility, property management experience, and limitations on how the rental income can be used.
- Lenders Can Implement the Changes Now: Fannie Mae is encouraging lenders to implement the changes immediately, and they become mandatory for loans with application dates on or after November 1, 2026.
Watch: Fannie Mae Just Changed It’s Rental Income Guidelines
Prefer the quick version? Check out this week’s Mortgage Minute video.
What Is a Departing Residence?
A departing residence is essentially the home you’re moving out of when purchasing or moving into another primary residence.
Let’s say you currently own a townhome in Arlington.
You’re ready for more space, so you decide to purchase a single-family home in Fairfax.
Instead of selling the Arlington property, you would like to keep it and turn it into a rental.
Your Arlington home is now your departing residence.
That decision creates an important mortgage qualification question:
How will the lender treat the mortgage payment on the home you’re keeping?
Unless sufficient qualifying income is available to carry both properties, being able to use rental income from the departing residence can make a major difference.
What Was the Problem With the Previous Rules?
One of the biggest challenges was timing.
A homeowner might have every intention of renting their current property after moving, and the local rental market might clearly support enough rent to cover most or all of the mortgage payment.
But that did not necessarily mean the lender could simply assume that rental income would exist.
Depending on the scenario, a lease agreement could be needed to establish the qualifying rental income.
Think about what that means practically for a homeowner.
You’re shopping for your next house but haven’t found it yet.
Do you sign a lease with a tenant for your current home?
When does the tenant move in?
What happens if it takes you another two months to find your next home?
What happens if your purchase falls through?
The financing requirement and the practical reality of moving didn’t always line up very well.
Fannie Mae specifically acknowledged that its rental income policies had become increasingly complex and could be difficult to apply consistently. Its September 2026 update restructures those policies and creates a new framework specifically for departing residences.
What’s Changing With Fannie Mae’s Departing Residence Guidelines?
This is where the new policy gets interesting.
Fannie Mae’s new framework allows departing residence qualification to rely on market-supported rents, reserve requirements, and limitations on the PITIA offset rather than a lease agreement.
In other words, an eligible homeowner may not have to find a tenant and execute a lease before the rental income can potentially help with mortgage qualification.
Instead, the lender can document the property’s supported market rent using the appropriate appraisal rental documentation.
Fannie Mae has created an entirely new Selling Guide addressing eligibility, documentation of monthly gross rental income, and how qualifying rental income is calculated.
Here’s a Simple Example
Imagine you own your current home with a monthly PITIA payment of $3,000.
You want to purchase another home and convert your existing property into a rental.
Previously, qualifying could become more complicated if you needed the future rental income to offset that $3,000 obligation but didn’t yet have an acceptable lease in place.
Under the new framework, the lender may be able to obtain market-supported rent for the property and use the allowable amount to offset some or potentially all of the existing housing obligation, depending on the specific scenario and Fannie Mae’s requirements.
Important: This doesn’t mean Zillow says your house rents for $3,500, so your lender automatically gives you $3,500 of qualifying income.
There are specific documentation, calculation, reserve, eligibility, and property-management requirements that have to be reviewed.
But the key difference is that the qualification process may no longer depend on having a tenant committed before you purchase your next home.
Why This Could Be a Big Deal for Move-Up Buyers
This is where I think the guideline change becomes especially useful.
I’ve worked with plenty of homeowners who are financially capable of buying their next home but get stuck on the logistics of what to do with their existing property.
They may not want to sell.
Maybe the home has a great interest rate.
Maybe they believe it will make a good long-term rental.
Maybe they want to keep the property as part of their investment strategy.
Or maybe they simply don’t want to make their next purchase dependent on coordinating a sale and purchase at exactly the same time.
Previously, needing a lease before being able to use the rental income could complicate that strategy.
The new rules could give some of those buyers another option.
Could This Help You Buy Before You Sell?
Potentially, yes.
There are generally several ways we can approach a homeowner who wants to purchase before selling their existing home.
Sometimes the borrower has enough income to qualify carrying both mortgages.
Sometimes we can use assets or another financing strategy to bridge the gap.
And sometimes converting the current home into a rental makes sense.
The new Fannie Mae guidelines potentially make that third option more practical because qualifying rental income may be available without first executing a lease.
That can also matter when writing an offer.
A buyer who doesn’t need to make the purchase contingent upon selling or leasing their current home may be able to write a cleaner offer.
Of course, qualifying for two homes and deciding whether you should own two homes are two different questions.
The financing needs to make sense for your overall financial situation.
When Do the New Fannie Mae Rental Income Rules Take Effect?
Fannie Mae’s Selling Guide Announcement SEL-2026-08 was issued September 2, 2026.
Fannie Mae is encouraging lenders to implement the rental income changes immediately.
The new requirements become mandatory for loans with application dates on or after November 1, 2026.
Because lenders may implement the changes at different times before that date, it’s worth confirming which guidelines your lender is currently using.
Frequently Asked Questions About Departing Residence Rental Income
Do I Need a Lease to Use Rental Income From My Current Home?
Under Fannie Mae’s new departing residence framework, a lease agreement may no longer be required. The policy allows qualifying to rely on market-supported rents, along with reserve requirements and PITIA offset limitations.
How Does the Lender Determine What My Home Could Rent For?
The lender will need appropriate documentation supporting the property’s market rent rather than simply relying on the homeowner’s estimate.
Fannie Mae’s rental income guidance includes the use of appraisal-based rental documentation such as the Single-Family Comparable Rent Schedule, Form 1007, Form 1025 for applicable properties, or the Rent Information section of the Uniform Residential Appraisal Report.
Can Rental Income Completely Eliminate My Existing Mortgage Payment for Qualification?
Potentially, but not automatically.
Fannie Mae specifically describes the new framework as including PITIA offset limitations, so the amount that can be used depends on the applicable calculation and the borrower’s individual scenario.
Can I Use This Strategy to Keep My Current Home as an Investment Property?
Potentially.
That’s one of the primary situations this guideline addresses: a borrower converting a current residence into a rental when purchasing or moving into another home.
Whether it works will depend on the borrower’s complete qualification and whether the departing residence meets Fannie Mae’s requirements.
Does This Mean I Should Rent My Current Home Instead of Selling It?
Not necessarily.
The fact that you can qualify while keeping a property doesn’t automatically mean keeping it is the right financial decision.
You should consider the property’s expected rent, mortgage payment, maintenance expenses, vacancy risk, available equity, reserves, long-term plans, and the financing needs for your next purchase.
The new guideline simply gives certain homeowners another option to evaluate.
Final Thoughts
I think this is one of those mortgage guideline changes that sounds technical but could have a very big practical impact.
For years, one of the challenges with converting a current home into a rental was the timing.
You may have needed the rental income to qualify for the next home, but you didn’t necessarily want to commit to a tenant before you knew where or when you were moving.
Fannie Mae’s new departing residence framework could remove some of that friction.
For certain move-up buyers, that could make it easier to keep a current home as an investment property, qualify for the next purchase, or potentially buy before selling.
But like most mortgage guidelines, the details matter.
If you’re considering buying another home while keeping your current property, run the numbers before you list the home for sale or start looking for a tenant. There may be more options available than you realize.