Fannie Mae Rental Income Change

If you already own a house in Columbus, Upper Arlington, Dublin, or Westerville and you want to buy the next one without selling the first, the usual blocker has been simple: Fannie Mae wanted a signed lease before the old payment could count as rental income. Plenty of move-up buyers do not have a tenant lined up yet. They have a listing plan, a property manager on deck, or a house that will sit empty for a month after they close.

Fannie Mae rewrote that rule. Selling Guide Announcement SEL-2026-08, dated September 2, 2026, replaces the departing-residence lease hunt with market-supported rent. Lenders are encouraged to use the new policy now. They must use it on every loan with an application date on or after November 1, 2026.

This is a conventional Fannie Mae guideline change. It is not an FHA rule, not a VA rule, and not a promise that every lender will treat your numbers the same way. Joe Sauk at Sauk Mortgage Group shops those overlays the same way he shops rates: against the actual loan, not a headline.

What actually changed for a departing residence

A departing residence is your current primary home when you buy a new primary home and keep the old one as a rental. Under the new topic B3-3.8-05, Fannie Mae does not want a lease on that vacated house. The Selling Guide is blunt: lease agreements are not permitted for any departing residence.

That is the piece borrowers are hearing as “you do not need a lease.” It is also a guardrail. A cousin-to-cousin lease written above the neighborhood rent cannot be used to stretch qualifying income. The lender has to support the rent with the market.

Documentation that can establish monthly gross rental income includes:

A complete appraisal report that includes market rents
Fannie Mae Form 1007, the Single-Family Comparable Rent Schedule, for the unit you occupy today
Market-analysis tools such as MLS, Zillow, or Redfin, with at least three comparable rentals in the same market area, and in the same subdivision or project when that is possible

The lender still has to document your current housing payment before any of that rental income can be used. If the departing house is a two- to four-unit property, the market comps apply to the unit you live in. Tenant-occupied units still need the most recent year of your individual federal tax return to support the rent already coming in.

If you are buying the next house with a conventional mortgage in Columbus, this is the path most move-up conversations will use. It is not the path for every occupancy or every loan program.

How the rental income is counted, and where it stops

Fannie Mae does not let the lender use 100% of the advertised rent. For a departing residence, the lender multiplies monthly gross rent by 75% to leave room for vacancy and upkeep, then subtracts the old house PITIA (principal, interest, taxes, insurance, and assessments).

What happens next is the part that decides whether the new purchase works:

If that adjusted net rental income is positive, it may offset the departing-residence PITIA only. It does not become extra income you can pile onto the new payment.
If it is negative, the shortfall is added to your debt-to-income ratio.

In plain terms: a Dublin ranch that rents near its payment can take the old mortgage off your back for qualifying. A Grove City house whose market rent does not cover the payment still costs you on paper. That is honest underwriting, not a loophole.

Reserves are the other number to plan for. If you have less than 12 months of property-management experience, the lender must verify six months of PITIA reserves on the vacated property. That six-month pile sits on top of any other reserve rules that apply when you already have more than one financed property. First-time landlords should expect that conversation. Experienced landlords may have a lighter reserve ask, but they still have to document the experience.

None of this sets a rate, a payment, or an approval. Down payment, credit, occupancy, and the rest of the application still have to work. Investment-property down payments are often larger than a primary-home down payment. Joe walks that split on the down payment guide and in a live quote, not as a one-size number.

The rest of SEL-2026-08, because it will show up on other loans

The departing-residence rule is the one Central Ohio move-up buyers will feel first. The same announcement reorganized the entire rental-income chapter. A few of those pieces matter if you are buying a rental, keeping a short-term rental, or adding a second investment close to the new purchase.

Short-term rentals on the subject property. Fannie Mae now has a dedicated topic for furnished one-unit investment properties rented for brief stays, typically under 30 consecutive days. The property has to be legally allowed to operate as a short-term rental under local rules. Short-term rental income cannot come from an accessory dwelling unit. On a purchase, the lender either uses Form 1007 based on long-term market rent or validated short-term comps (three properties, rates, days rented last year). Qualifying income on that purchase path uses 50% of monthly gross rent, then subtracts PITIA. Positive results still only offset that property’s PITIA. Columbus and the inner suburbs treat short-term rentals differently by city and HOA. Legal permission is not optional.

Investment properties purchased within 45 days of the new loan. If you just bought another rental and now you are originating the subject loan, Fannie Mae will not take a lease on that recent purchase. The lender uses an appraisal with market rents, Form 1007, or at least three comps. Same 75% factor. Same PITIA-offset limit when the net is positive.

When a lease is still in play. Other rental scenarios can still use a lease, and those standards got tighter: minimum term, first lease payment due on or before the first payment of the new loan, extra scrutiny on family-member and interested-party leases, and proof the lease is actually in effect (banked rent, or a security deposit plus the first month deposited). A lease that is not supported by market rent can be cut down to the market figure. If you are buying a rental that is vacant, or the seller’s lease is not transferring to you, a lease is not required. Form 1007 or Form 1025 can stand on its own.

If the conventional rental-income math still does not work, that is a reason to compare programs, not a reason to invent income. Some investors look at bank-statement or DSCR options when personal tax returns or conventional rent treatment will not carry the payment. Those are different products with different rules. Joe covers that split on the bank statement and investor-program page.

What this means for a Central Ohio move-up, in practice

Joe has originated mortgages since 1993. Sauk Mortgage Group Ltd., founded in 2019, is licensed in Ohio and Florida. The shop is an independent brokerage: Company NMLS 1879972, Joe Sauk NMLS 589820, office at 1880 Mackenzie Drive, Suite 107, Columbus, OH 43220. The job on this change is not to cheer Fannie Mae. It is to run your current house and your next house through the actual calculation before you write an offer.

A typical conversation now looks like this:

What is the current PITIA on the house you are leaving?
What do three nearby rentals actually lease for, not what a friend thinks the street will get?
After the 75% vacancy factor, does the rent cover that PITIA or add to your ratio?
Do you have documented property-management experience, or should we plan on six months of extra reserves?
Is the next loan even a Fannie Mae conventional loan, or are we looking at FHA, VA, jumbo, or an investor product?

If you are leaving a Hilliard or Powell home for more space in New Albany, or keeping a first house near campus while you buy in Upper Arlington, the new rule can remove the scramble to sign a tenant before the new closing. It does not remove the need for real rent comps, reserves, and a lender who will actually deliver the loan under the new chapter.

Freddie Mac and portfolio lenders may not match Fannie Mae on the same day. Some wholesale investors will adopt SEL-2026-08 early. Some will wait until November 1. Overlay differences are why a second look still matters. That is the work Joe does when he shops multiple lenders for the same borrower.

Questions Columbus buyers are asking

Do I need a signed lease to keep my current home when I buy the next one?

Not on a Fannie Mae conventional loan that uses the new departing-residence rule. The lender cannot use a lease for that vacated primary residence. Market rent from an appraisal, Form 1007, or three local comps is the documentation. You still have to document today’s housing payment, and the rent still has to survive the 75% factor and the PITIA math.

When does this start?

Lenders may use the new Selling Guide language immediately. They must use it for applications dated on or after November 1, 2026. If you are shopping now, ask which investors have already flipped the switch. Do not assume every lock desk is there yet.

Can I still use a lease if I already have a tenant?

Not to qualify the departing residence. Fannie Mae barred leases on that property type so the rent is market-supported, not tenant-story-supported. A real tenant is still useful for your cash flow after closing. It is not the paper the underwriter will use to size the old payment.

Does this apply to FHA, VA, or jumbo loans?

No. SEL-2026-08 is Fannie Mae Selling Guide policy. FHA, VA, USDA, jumbo, and many non-QM programs have their own rental-income rules. Joe will tell you which set you are actually in before anyone counts on a lease-free departing residence.

Will the old house payment disappear from my debt ratio?

Only if the adjusted net rental income covers that PITIA. If market rent after the 75% haircut is short, the shortage stays in the ratio. Positive leftover rent does not get added as bonus income on the new payment.

What if I have never been a landlord?

Plan on six months of PITIA reserves for the vacated house, on top of any other reserve rules that apply. Property-management experience of 12 months or more can change that reserve piece. Experience has to be documented. A verbal “I helped my brother with a duplex” is not enough.

I am buying a vacant rental, not converting my own house. Do I still need a lease?

If the property is not currently rented, or the existing lease is not transferring to you, Fannie Mae does not require a lease. Form 1007 or Form 1025 can set market rent. If a lease is transferring, it has to meet the tighter lease standards and be supported by the market schedule.

Talk through the numbers before you list or offer

Guideline changes help when someone on your side has already read the chapter and will run the comps, the reserves, and the overlay list. Joe Sauk does that from the Mackenzie Drive office for Ohio and Florida borrowers. Call (614) 353-5088, email joe@saukmortgagegroup.com, or start on the contact page. If you already have an offer in motion, apply online or request a quote so the departing-residence math is in the application before the clock starts.

Sauk Mortgage Group Ltd. NMLS 1879972. Joseph Sauk NMLS 589820. Licensed in Ohio and Florida. This article is general education about Fannie Mae Selling Guide Announcement SEL-2026-08. It is not a commitment to lend, not a rate quote, and not advice that every investor has implemented the change. Equal Housing Opportunity.