Can I use a lease to count rental income on the home I am leaving?

Not on a Fannie Mae conventional loan with an application date on or after November 1, 2026, and many lenders are switching earlier in October. The lender must document market rent instead, using an appraisal with market rents, a Form 1007 rent schedule, or at least three comparable rentals from a tool like Zillow, Redfin, or the MLS. Freddie Mac still accepts a lease for a departing residence.

How much of the rent on my departing residence counts toward qualifying?

Under the new Fannie Mae rule, 75% of the documented market rent is compared to the full payment on the departing home, including taxes, insurance, and HOA dues. A positive result only cancels that payment and cannot be added to your income. A negative result is added to your monthly debts.

Do I need reserves to rent out my current home and buy a new one?

If you have less than 12 months of property management experience, Fannie Mae requires six months of the departing home's full payment in reserves, in addition to any reserves required for owning multiple financed properties. Borrowers with 12 or more months of documented landlord experience are not subject to that additional requirement.

When does the Fannie Mae departing residence rule take effect?

Fannie Mae Selling Guide Announcement SEL-2026-08 makes the change mandatory for loans with application dates on or after November 1, 2026, and encourages lenders to implement it immediately, so some lenders are applying it to applications in October. Ask your lender for its specific cutoff date.

Guideline Update Wednesday, September 23, 2026 6 min read

Renting Out Your Current Home to Buy the Next One? Fannie Mae Just Changed the Math

One of the most common move-up plans I see goes like this: buy the next house, keep the current one, rent it out, and let the rent cover the old payment. For years the way you proved that rent to a conventional lender was a signed lease. Starting with applications dated November 1, 2026, Fannie Mae will no longer accept a lease on the home you are leaving, and many lenders are switching over in October. Instead the lender has to document market rent, count only 75% of it, and use it only to cancel out the old payment. Here is exactly how the new math works, who it helps, who it hurts, and what to do if you are planning this move.

What changed

Fannie Mae rewrote its rental income rules in Selling Guide Announcement SEL-2026-08, published September 2. The section that matters for move-up buyers is the one on the departing residence: the primary home you are vacating and converting to a rental when you buy a new primary. Four things are different now.

Leases are out. A lease agreement is no longer permitted to document rent on a departing residence, even a signed one with a deposit in hand. The lender must establish market rent using an appraisal that includes market rents, a Single-Family Comparable Rent Schedule (Form 1007), or a market analysis from a tool like Zillow, Redfin, or the MLS supported by at least three comparable rentals.
Only 75% counts, and only as an offset. The lender takes 75% of the documented market rent and subtracts the full payment on the departing home (principal, interest, taxes, insurance, and HOA dues, which lenders call PITIA). If the result is positive, it cancels the old payment and that is all it does. Any surplus cannot be added to your qualifying income. If the result is negative, the shortfall is added to your debts.
You need a current housing payment. To use any departing-residence rent at all, the lender has to document that you currently have a housing payment. If the old house is paid off, there is nothing to offset, and the rent does not help you.
New landlords need reserves. If you have less than 12 months of property management experience, the lender must verify six months of the departing home's full payment in reserves, on top of any reserves already required because you will own more than one financed property.

The math, with real numbers

Say your current home carries a $2,500 monthly payment with taxes and insurance, and comparable rentals in your neighborhood support $3,000 a month.

Departing residence calculation

$3,000 × 75% = $2,250, minus $2,500 PITIA = $250 short

The $250 shortfall is added to your monthly debts. The lender does not count the full $2,500 payment and then add a $250 loss; the rent shrinks your old housing obligation to a $250 net hit for qualifying. First-time landlord? Add $15,000 in reserves (six months of $2,500) to the cash you need at closing.

Three ways that example can shift:

Rent supports $3,400. 75% is $2,550, which is $50 more than the payment. The old payment disappears from your ratios. The extra $50 does not count as income.
You had a signed lease at $3,600. Under the old framework, 75% of that lease ($2,700) would have covered the $2,500 payment and the $200 surplus could count toward your income. Under the new framework the lease itself is irrelevant. If market comps only support $3,000, you are back to the $250 shortfall, even though your tenant will actually pay $3,600.
What $250 a month costs you. At today's posted conventional rate on my rates page, $250 a month of extra debt is roughly $38,000 of purchase loan you can no longer qualify for. For some buyers that is the difference between the house they want and the one they settle for.

Who this hurts, and who it quietly helps

It hurts anyone who was counting on above-market rent from a lease, anyone who needed the surplus rent as income to qualify, and first-time landlords who do not have six months of the old payment sitting in the bank. If you have already signed a lease and are shopping for the new home right now, get your application dated before your lender's cutoff, because after that the lease is a piece of paper the underwriter is not allowed to look at.

It helps a group that used to get stuck: buyers who wanted to keep the old house but could not find a tenant before closing. Under the old rules, no lease meant no rent credit, and a lot of people were forced to sell first or carry both payments on paper. Now the lender can use three comparable rentals from Zillow or the MLS and give you the offset without a tenant in place. If your neighborhood rents comfortably above your payment and you have reserves, the new rule makes your file easier, not harder.

It is a Fannie Mae rule, not a law

This is the part most write-ups skip. Freddie Mac, the other conventional buyer, did not make this change. Freddie still accepts 75% of the rent on a lease for a departing residence, and when there is no lease it uses market rent from the appraiser's rent schedule. Freddie can also let surplus rent count as income for borrowers with landlord experience. So a file that stops working under Fannie's new math may still work run through Freddie's system, and a loan officer who only knows one path will tell you no when the answer is yes. Beyond conventional, FHA and VA have their own departing-residence rules, and if the numbers are tight there are portfolio and non-QM programs that treat rental income differently. The point is that the new rule narrows one road; it does not close the highway.

Planning to keep your current home and buy the next one?

Send me your current payment, a rough idea of what it would rent for, and your price range. I will run the new Fannie math, the Freddie math, and the reserve requirement side by side and tell you whether to apply before the October changeover. No credit pull, no pressure, usually same day.

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Four moves to make now

1. Find out what your house really rents for. Not what a neighbor got, not what you hope. Pull three comparable rentals in your subdivision and look at what actually leased. If the number is under your payment divided by 0.75, plan for a DTI hit and know its size before you shop.

2. Count your reserves honestly. Six months of the old payment, in addition to your down payment, closing costs, and any multiple-property reserves. Retirement accounts can count toward reserves on most programs at a discount, so do not assume it has to be cash in checking. If you have managed a rental for 12 months or more, document it, because that waives the requirement.

3. If you are already under contract or actively shopping, ask your lender for their cutoff date. Fannie's date is November 1 for applications, and lenders are allowed to switch earlier. Some are moving in mid-October. An application dated before the cutoff is underwritten under the old framework.

4. Ask for both paths. Make sure whoever you work with prices the file through Fannie's system and Freddie's, and looks at whether a HELOC opened before you list or a recast after the old home sells changes the plan. The Resource Center has a one-page guide on the new rule you can share with your agent, alongside the buying-before-you-sell guide.

The bottom line

Beginning November 1, and earlier at many lenders, a lease will not prove rent on the home you are leaving. Market rent will, at 75%, and only to cancel the old payment. New landlords need six months of that payment in the bank. In my $3,000 rent, $2,500 payment example, that is a $250 monthly hit and $15,000 in reserves, and roughly $38,000 less house. The same rule also opens a door for buyers who could never find a tenant in time. Whether it helps or hurts you comes down to comps, reserves, and which agency your loan runs through, and those are three things I can check for you in an afternoon. My number is at the top of the page and I answer it personally.

Travis Saling

Licensed Loan Officer · NMLS 299683 · 15+ years

I'm a licensed mortgage loan officer serving California, Oregon, Washington, Nevada, Arizona, Colorado, Idaho, Florida, Texas, and Tennessee. I write this blog myself, no ghostwriters, no AI fluff. If you have a question about your specific situation, reach out.

Disclaimer: This blog post is for informational purposes only and does not constitute a commitment to lend, a guarantee of any specific rate or term, or financial, tax, or legal advice. Guideline summaries reflect Fannie Mae Selling Guide Announcement SEL-2026-08 and Section B3-3.8-05 as published September 2, 2026, and Freddie Mac Seller/Servicer Guide Section 5306.1 as of the same date; agency guidelines change without notice and individual lenders may apply overlays or earlier implementation dates. Payment, rent, reserve, and qualifying examples are simplified illustrations only; actual calculations depend on the loan program, property type, credit profile, and full underwriting review. Posted rates on taketherate.com are sample rates for well-qualified borrowers, priced with a 1-point origination fee, and vary by credit score, loan-to-value, loan amount, property type, and program. Take The Rate · NMLS #299683 · Equal Housing Lender.