For homeowners looking to buy their next home without selling their current one, an important Fannie Mae guideline change could make qualifying significantly easier.

Until now, borrowers planning to convert their current primary residence into a rental often faced a frustrating requirement: before the expected rental income could help offset the existing mortgage payment, lenders generally needed a signed lease along with documentation supporting the new tenancy.

That created an obvious timing problem. How do you secure a tenant for a home you’re still living in when you may not even know exactly when you’ll be moving?

Fannie Mae’s latest guidance changes that equation.

Effective September 2, 2026, qualifying rental income for an eligible departing residence can be based on documented market rent rather than an executed lease.

Here’s what borrowers, homeowners and real estate professionals should know.

What Is a Departing Residence?

A departing residence is the home you currently occupy as your primary residence but intend to convert into a rental after purchasing and moving into another property.

Previously, borrowers could face difficulty using anticipated rental income from that property to offset its existing housing expense. Without acceptable documentation of rental income, the entire mortgage payment could potentially be included when calculating the borrower’s debt-to-income ratio.

For some borrowers, that difference could determine whether they qualified for their next home.

Under Fannie Mae’s updated guidance, lenders may now establish the property’s expected rental income using market rent rather than requiring the borrower to have a tenant and lease in place before closing.

Depending on the loan and property, market rent may be documented through acceptable sources such as:

• An appraisal with appropriate market-rent documentation
• A Single-Family Comparable Rent Schedule (Form 1007)
• Other acceptable market-rent documentation consistent with Fannie Mae and lender requirements

The key takeaway is simple:

You may no longer need to rent your current home before you can use its market rental potential when qualifying for your next Fannie Mae conventional mortgage.

How Does the Rental Income Calculation Work?

Fannie Mae doesn’t simply give borrowers credit for 100% of the property’s expected rent.

Generally, lenders use 75% of the documented monthly market rent.

That adjustment accounts for expenses that come with owning a rental property, such as vacancies and ongoing maintenance.

The qualifying calculation then considers the departing property’s full housing expense, which can include:

• Principal
• Interest
• Property taxes
• Homeowners insurance
• HOA dues, when applicable

For example, suppose your current home’s documented market rent is $3,000 per month.

75% of $3,000 equals:

$2,250 in qualifying rental income.

If the total monthly housing expense on the property is $2,100, the rental income may be sufficient to offset that obligation for qualifying purposes, subject to the applicable Fannie Mae and lender guidelines.

If the qualifying rental amount does not completely cover the housing expense, the remaining shortfall may still be included in your debt-to-income calculation.

The important point is that the old mortgage doesn’t necessarily have to work against your qualifying ability simply because you haven’t rented the property yet.

What About Reserves?

Borrowers converting a primary residence into a rental should also be prepared for potential reserve requirements.

The amount of reserves required can depend on factors including the borrower’s history of receiving or managing rental income, the number of financed properties, the loan structure and other Fannie Mae requirements.

Reserves generally consist of eligible assets remaining after closing that demonstrate the borrower has the financial resources to continue making required payments.

Depending on the circumstances, eligible assets may include funds in checking or savings accounts, investments, retirement assets or other qualifying sources.

Because reserve requirements can vary considerably by borrower and transaction, this is an area where having the loan reviewed before making an offer can be particularly valuable.

Who Could Benefit Most From This Change?

Homeowners With a Low Mortgage Rate

Many homeowners purchased or refinanced when mortgage rates were substantially lower than today’s rates.

Selling that property means giving up the existing financing.

For homeowners who have considered keeping the property as a long-term rental, the updated guideline may make it easier to do so while still qualifying to purchase another primary residence.

Move-Up Buyers

Maybe your first home worked perfectly several years ago, but you’ve outgrown it.

Instead of selling the property to qualify for the next home, you may now have another option: convert the existing home into a rental and use its documented market rent as part of the qualification analysis.

That could allow certain borrowers to begin building a rental portfolio while purchasing the home that better fits their needs today.

Homeowners Relocating for Work

Relocations rarely happen on a perfect schedule.

You may need to close on your next home before you’ve moved out of your current one. Requiring a tenant to commit to a property before you know your exact move-out date can make the process unnecessarily complicated.

Using market rent can provide considerably more flexibility.

Buyers Who Don’t Want to Rush Into a Lease

Finding the right tenant matters.

A homeowner shouldn’t necessarily have to accept the first available tenant simply because a mortgage closing is approaching.

The updated guideline may give borrowers more time to properly market the property, screen potential tenants and establish an appropriate rental arrangement after moving.

Real Estate Agents Working With Move-Up Buyers

This isn’t only a mortgage guideline change.

It can potentially change the way certain real estate transactions are structured.

A homeowner who previously needed to sell before purchasing another property may now have the ability to explore keeping the existing home instead.

That can potentially mean:

No home-sale contingency.
No rushed rental agreement.
No requirement to sell a property solely because of mortgage qualification.

For agents, identifying these borrowers early could create opportunities that weren’t previously practical.

What Hasn’t Changed?

This isn’t a blanket rule allowing any projected rental income to be used automatically.

The property’s market rent still needs to be properly documented, and the borrower must satisfy the applicable Fannie Mae underwriting requirements.

The lender will still evaluate items such as:

• Credit
• Income
• Assets
• Debt-to-income ratio
• Property eligibility
• Rental-income documentation
• Reserve requirements
• Overall loan eligibility

Individual lenders may also have additional underwriting requirements, sometimes referred to as overlays, beyond Fannie Mae’s minimum standards.

That’s one reason working with Aceland Mortgage can be valuable.

As a mortgage broker, Aceland Mortgage can evaluate the complete scenario and help determine which available loan program and lending partner best fits the borrower’s circumstances rather than looking at the transaction through the guidelines of only one lender.

The Bottom Line

This is a meaningful change for homeowners who want to move without necessarily selling their current home.

Instead of trying to find a tenant, execute a lease and coordinate a rental start date while you’re still living in the property, eligible borrowers may now be able to qualify using documented market rent.

For the right homeowner, that could turn this:

Sell current home → Buy next home

into this:

Keep current home → Convert it to a rental → Buy next home

And over the long term, that can be a very different financial strategy.

If you’ve considered moving but didn’t think you could qualify while keeping your current property, Aceland Mortgage can run the numbers before you make any decisions.

We’ll look at the existing mortgage, estimated market rent, equity, income, assets and proposed new purchase to determine what options may be available.

Aceland Mortgage LLC
Bill Halick, MBA
Founder | Mortgage Loan Originator
NMLS #206914

Programs, guidelines, rates and terms are subject to change without notice. This information is provided for general educational purposes and is not a commitment to lend. All loans are subject to credit approval, underwriting requirements, property eligibility and applicable program guidelines.

Frequently Asked Questions

Do I need a signed lease if I’m keeping my current home and turning it into a rental?

Under Fannie Mae’s updated departing-residence guidance, eligible transactions may use properly documented market rent rather than requiring an executed lease to establish qualifying rental income. The specific documentation and underwriting requirements will depend on the transaction.

Does the lender count 100% of the expected rent?

Generally, no. Fannie Mae’s rental-income calculation typically uses 75% of the documented gross monthly rent, subject to the applicable guidelines.

What if 75% of the rent doesn’t cover my existing mortgage payment?

The lender will evaluate the applicable rental income against the property’s qualifying housing expense. If there is a remaining shortfall, that amount may affect your debt-to-income ratio.

Can I use rental income above my existing mortgage payment as additional qualifying income?

How rental income is treated depends on the specific circumstances, including the property’s status and the borrower’s rental-management history. Your mortgage professional should calculate the income according to the applicable Fannie Mae requirements rather than assuming that every dollar above the payment can be added to qualifying income.

Will I need reserves?

Possibly. Reserve requirements depend on the overall transaction, including factors such as rental-property history and the number of financed properties. Aceland Mortgage can calculate the applicable reserve requirement as part of the prequalification process.

Does this rule apply to FHA and VA loans?

No. This particular update relates to Fannie Mae conventional financing. FHA, VA and other mortgage programs have separate requirements for rental income and departing residences.

Can Aceland Mortgage determine whether this works for my current home?

Yes. We can review your existing mortgage payment, estimated market rent, income, assets and proposed purchase to determine how keeping the property could affect qualification for your next home.