The rule changed enough that old advice can be wrong
If you're moving out of your current primary residence and keeping it as a rental, conventional underwriting may allow rental income to help with the old housing payment. But the current Fannie Mae rule is more specific than the familiar advice to 'get a lease and use 75% of the rent.'
Under Fannie Mae's September 2026 departing residence guidance, a lease agreement isn't permitted as the documentation used to establish market rent for you occupied unit of the departing residence. The lender instead documents market rent using an appraisal with rent support, Form 1007, or qualifying market analysis tools with at least three comparable rental properties.
How the calculation works
For a one unit departing residence, the lender starts with documented monthly market rent and applies a 75% factor. That produces the net rental income figure before the property's PITIA is subtracted.
The result is adjusted monthly net rental income, or ANRI.
Example: $4,000 market rent doesn't mean $4,000 of qualifying income
Assume market rent is supported at $4,000 per month and the departing residence has $3,300 in PITIA.
Seventy five percent of $4,000 is $3,000. Subtract the $3,300 PITIA and the ANRI is negative $300.
That $300 loss is included in your DTI. The lender doesn't count the full $4,000 rent, and it doesn't simply ignore the old property.
Positive ANRI doesn't become unlimited extra income
This is a subtle point that matters. Under the current Fannie Mae departing residence rule, if ANRI is positive, the rental income may be used to offset the departing residence PITIA only. The positive amount isn't automatically added to qualifying income as if you had an established investment property producing surplus cash flow.
So if the same home had $4,800 of supported market rent, 75% would be $3,600. With $3,300 PITIA, the positive $300 would help neutralize the housing obligation, but the rule doesn't turn that $300 into free additional monthly income for this scenario.
Why Fannie Mae uses 75% of market rent
The 25% haircut is a standardized allowance for vacancy and operating friction. Real landlords may experience more or less than that, but mortgage qualification isn't a property management pro forma. It is an underwriting calculation.
That is why a projected rent number from a property manager or a signed tenant arrangement shouldn't be treated as identical to qualifying rental income.
The lender must document a current housing payment
Fannie Mae also requires the lender to document a current housing payment to use rental income from the departing residence in qualifying. That requirement is part of the broader eligibility framework for rental income.
In practice, this means you shouldn't assume rental income can be used simply because the property will rent well. The file still has to meet the program's documentation rules.
Reserves can be mandatory
When you have less than 12 months of property management experience, Fannie Mae's current rule requires six months of reserves to cover the PITIA obligation for the vacated property. Those reserves are in addition to any other reserve requirements that apply, including rules for multiple financed properties.
This is one reason a move up buyer shouldn't use every available dollar for the down payment on the new home.
Multi unit departing residences are more complicated
If the property being vacated has multiple units, the lender treats the borrower occupied unit differently from tenant occupied units. Fannie Mae requires the most recent year of individual federal tax returns to support rental income from the tenant occupied portions, while the vacancy factor for the departing residence analysis applies to you occupied unit.
That is a very different file from a simple one unit home conversion.
What not to do
- Don't sign a lease and assume the lender will use the lease amount for Fannie Mae departing residence qualification.
- Don't spend the cash reserves needed to satisfy the departing property requirement.
- Don't calculate rent minus principal and interest only. PITIA is the relevant housing obligation.
- Don't assume a positive rent spread becomes unrestricted qualifying income.
- Don't wait until after the offer is accepted to discover whether the lender can document market rent under the current rule.
A better preapproval workflow
Worth knowing
Confirm whether the current home will be sold, retained as a rental, or kept as a second home.
Obtain a realistic market rent estimate using a method the lender can actually document.
Calculate 75% of supported market rent.
Subtract the full PITIA for the departing residence.
Determine whether the result is an offset or a loss in the qualifying analysis.
Verify whether the six month departing residence reserve requirement applies.
Re run the new home DTI before making an offer.
Bottom line
Rental income from a departing residence can make a move up purchase work, but this isn't a 'lease cancels mortgage' rule. Current conventional underwriting uses documented market rent, a 75% factor, the old property's full PITIA and specific reserve requirements. Model the exact calculation before relying on the rental strategy.
Common questions
How much of the rent can I count?
Most lenders count about 75% of the lease amount, leaving 25% for vacancy and costs.
Do I need landlord experience?
It depends on the loan. FHA usually requires 25% equity in the home you're leaving unless you're relocating for work. Conventional rules are often more flexible.
Does the tenant have to move in before I close?
Usually not, but you'll need a signed lease and proof of the security deposit or first month's rent.