New Fannie Mae Rule: Keep Your Home as a Rental With No Lease Required

If you have ever tried to buy your next home while keeping your current one as a rental, you know the catch. The lender wanted a signed lease and a deposited security check before it would count a dollar of rent against your old mortgage payment. Which meant finding a tenant for a house you were still living in, on a move-out date you did not know yet.

As of September 2, 2026, that catch is gone. Fannie Mae updated its Selling Guide (Announcement SEL-2026-08) and the departing residence now qualifies on market rent, no lease required. Here is what changed, how the math works, and who this helps most.

What changed for rental income on a departing residence?

A "departing residence" is the home you currently live in and plan to rent out after you move. Under the old rules, using its rental income to offset the mortgage payment took a fully executed lease plus proof the tenant's security deposit had been received. No lease, no offset. The full payment counted against your debt-to-income ratio.

The updated guide drops that. Lenders now document market rent for the home instead, using one of these:

• An appraisal that includes market rents, or a Single-Family Comparable Rent Schedule (Form 1007)
• A market analysis from tools like Zillow, Redfin or the MLS showing at least three comparable rentals in the same area

The guide is direct about it: lease agreements are not used for a departing residence at all. Even if you already have a tenant lined up, the qualifying number comes from market rent, not the lease.

How is the rental income calculated?

The math is the same formula lenders already use for investment property:

• Take 75% of the monthly market rent
• Subtract the full payment on the departing home (principal, interest, taxes, insurance and any HOA dues)

If the result is positive, the departing home's payment is fully offset and drops out of your debt-to-income ratio. If it is negative, only the shortfall counts against you.

One thing to know: a surplus above the payment does not get added to your income. The best outcome is a complete washout of the old mortgage, which for most people is exactly the outcome they needed.

What is the reserve requirement?

If you have less than 12 months of experience managing rental property, the lender will verify six months of reserves to cover the departing home's payment. That can be savings, retirement accounts or other liquid assets you are not using for the down payment.

If you have been a landlord for a year or more, that reserve requirement does not apply.

Who does this help?

Move-up buyers who want to keep their first home. This is the big one. If your current mortgage is a low fixed rate, keeping the house as a rental and buying your next one is often the smartest financial move available. The lease requirement made it hard to execute. Now you can qualify on market rent, close on the new home, and rent the old one out on your own timeline.

Anyone relocating for work. Relocation timelines rarely line up with a lease start date. You can now buy at the new location before the old house is rented.

Buyers in tight rental markets. Landing a good tenant takes time. This change lets you take that time instead of rushing to sign someone before closing.

Sellers who are tired of contingent offers. For real estate agents, this means more buyers who can write a clean offer on the next home without selling first.

What has not changed

The departing home still has to make sense as a rental. Market rent has to be documented, the numbers still run through the 75% formula, and reserves still apply for first-time landlords. Lenders can also add their own requirements on top of Fannie Mae's, and on a brand-new change some will. That is where working with a broker helps. Modern Home Lending works with 40+ lenders and can place your loan with one that follows the updated guideline.

Programs, rates and terms are subject to change without notice. This is not a commitment to lend, and all loans are subject to credit approval and program guidelines.

The bottom line

For years, keeping your home as a rental while buying the next one required a tenant before you had even moved out. Effective September 2, 2026, Fannie Mae qualifies the departing residence on market rent instead, with no lease and no security deposit required.

If you have been putting off a move because of this rule, it may be time to run the numbers again. Start with a custom rate quote, no SSN and no credit check required to see your options.

FAQ

Do I need a lease to rent out my current home when buying a new one?

Not for a conventional loan sold to Fannie Mae, as of September 2, 2026. The lender documents market rent through an appraisal, a Form 1007 rent schedule, or a market analysis with at least three comparable rentals. A lease is not required and is not used for the calculation.

How much of the rent counts toward qualifying?

75% of the documented market rent, minus the full monthly payment on the departing home. A positive result offsets that payment completely. A negative result counts against your debt-to-income ratio. A surplus is not added to your income.

Do I need reserves to keep my home as a rental?

If you have less than 12 months of experience managing rental property, the lender will verify six months of reserves for the departing home's payment. With a year or more of landlord experience, that requirement does not apply.

Does this apply to FHA or VA loans?

This update is to Fannie Mae's Selling Guide and applies to conventional loans delivered to Fannie Mae. FHA and VA have their own rental income rules, which we can walk you through for your scenario.

Where does Modern Home Lending operate?

We are a mortgage broker based in Scottsdale, Arizona, licensed in Arizona, Colorado, Florida and Georgia. The Fannie Mae rule in this post is national and applies to every conventional loan delivered to Fannie Mae.