Skip to content
ClosingCodeClosingCode
ENES

Conventional loans · Fannie Mae B3-3.8-05Keeping your current home as a rental: Fannie Mae's departing residence rules

When a buyer moves out of their primary residence and turns it into an investment property while buying a new primary residence, Fannie Mae lets the lender count rental income from the old home – the departing residence. Under the September 2, 2026 version of the Selling Guide, lease agreements are not permitted for a departing residence: the lender determines market rent from a complete appraisal with market rents, a Single-Family Comparable Rent Schedule (Form 1007), or market analysis tools such as Zillow, Redfin or the MLS with at least three comparable rentals, ideally from the same subdivision or project. The lender must also document the buyer's current housing payment. The monthly gross rent is multiplied by 75%, and the departing residence's full payment (PITIA) is subtracted. If the result is positive, it can only offset that payment; if it is negative, the shortfall counts in the debt-to-income ratio. A buyer with less than 12 months of property management experience needs six months of the old home's PITIA in reserves, on top of any reserves for other financed properties. For a multi-unit departing residence, the lender also needs the latest Form 1040 for the units already rented.

How the rental income is calculated

  1. Step 1

    Market rent

    From an appraisal with market rents, Form 1007, or three comparable rentals from Zillow, Redfin, the MLS or similar – not a lease.

  2. Step 2

    × 75%

    The vacancy and expense factor gives net rental income.

  3. Step 3

    − PITIA of the old home

    Principal, interest, taxes, insurance and association dues.

  4. Result

    Positive or negative

    Positive only offsets the old home's payment; negative is added to the debt-to-income ratio.

Other requirements

  1. Current housing payment

    The lender documents it before using any rental income.

  2. No lease

    Lease agreements are not permitted for a departing residence.

  3. Landlord experience

    Under 12 months: six months of the old home's PITIA in reserves.

  4. Multi-unit

    Already-rented units follow the non-subject property rules; the latest Form 1040 is required.

What the TC can do

  • Tell the buyer early that a signed lease will not count – the lender works from market rent.
  • Get the old home's mortgage statement, tax bill, insurance and HOA dues to the lender in one go.
  • If the buyer has never been a landlord, flag the six months of reserves before the offer, not at underwriting.

Questions buyers ask

Can I use rental income from my current home to buy a new one?

Yes. Fannie Mae lets the lender count 75% of the market rent of your departing residence, minus its full payment; a positive result offsets that payment and a negative one counts as debt (Selling Guide B3-3.8-05).

Do I need a signed lease for my departing residence?

No – under the September 2026 Selling Guide, lease agreements are not permitted for a departing residence. Market rent comes from an appraisal, Form 1007 or three comparable rentals.

How many months of reserves do I need if I rent out my old house?

Six months of the old home's PITIA if you have less than 12 months of property management experience, in addition to any other required reserves.

Related guides

Request the old home's mortgage statement, tax bill and insurance from the buyer in ClosingCode with an upload link in English or Spanish – and see what is still missing.

Start free trial

Source: Fannie Mae Selling Guide B3-3.8-05, Rental Income from Non-Subject Property: Departing Residence (09/02/2026), selling-guide.fanniemae.com, read October 25, 2026.

General information about Fannie Mae conventional loans, not financial or tax advice. FHA, VA, USDA and each lender's overlays can differ. ClosingCode is software; it is not a lender. This guide is not a substitute for the advice or services of an attorney.