Planning to Rent Out Your Departing Residence? Here’s What You Need to Know After Nov 1, 2026
Vera Chang
GMCC District Manager
If you plan to purchase a new primary residence and rent out your current home, Fannie Mae’s updated guideline may affect how much you can qualify for.
Effective for applications dated November 1, 2026, or later, with earlier adoption permitted, here are the key changes:
1. Lease agreements can no longer be used to determine qualifying rental income from a departing residence.
While this may simplify the documentation process, the qualifying calculation is now more conservative. Even if the borrower has a signed lease with higher rent—perhaps because the home was recently renovated or upgraded—the lender must use supported market rent instead of the actual lease amount.
2. How will the lender determine the rent?
Market rent must be supported by:
(1) An appraisal or Form 1007; or
(2) An online market analysis from Zillow, Redfin, MLS; or
(3) A similar source, supported by at least three comparable rental properties.
How does this affect homebuyers?
🔴 Only 75% of the supported market rent may be used.
The rental income may offset the departing home’s PITIA, but any positive cash flow is capped at $0. The surplus cannot be added to the borrower’s qualifying income.
If 75% of the supported market rent does not cover the PITIA, the shortfall must be included in the borrower’s DTI.
🔴 Additional reserves may be required.
Borrowers with less than 12 months of property-management experience must have an additional six months of PITIA reserves for the departing residence.
A Potential Solution: Buy Without Sell
With these more conservative rental-income rules, our Buy Without Sell Program is more valuable than ever.
For borrowers who plan to sell their current home after purchasing the next one, this program may provide an important alternative. Subject to program requirements, we may be able to qualify the borrower without including the departing home’s mortgage payment in the DTI.
This can help borrowers:
(1) Purchase their next home before selling the current one;
(2) Avoid relying on restricted departing-residence rental income;
(3) Reduce the pressure of coordinating two closings;
(4) Avoid moving twice or submitting a contingent offer; and
(5) Preserve more purchasing power for the new home.
If you are deciding whether to rent or sell your current home, let’s review both options before you make an offer. The right financing strategy can make a meaningful difference in your purchasing power.
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