Fannie Mae issued significant updates to its rental-income guidelines on September 2, 2026. Lenders may implement the changes immediately and must apply them to loan applications dated on or after November 1, 2026.
The update addresses several situations that frequently affect real-estate investors and homeowners who plan to convert their current home into a rental property.
Quick Answers About the 2026 Rental Income Changes
When do the new Fannie Mae rental-income rules take effect?
Lenders may implement the changes immediately. They must apply them to loan applications dated on or after November 1, 2026.
Can a lease establish rental income from a departing residence?
No. Under the new guidelines, the lender must support the projected rent with acceptable market-rent data rather than a lease agreement.
How is long-term projected rental income calculated?
The lender generally uses 75% of the supported monthly market rent before subtracting the property’s complete PITIA payment.
How is projected short-term rental income calculated?
When qualified short-term market-rent data is used, the lender generally uses 50% of the supported gross rental amount before subtracting PITIA.
New Rules for Departing Residences
A departing residence is a borrower’s current primary home that will become an investment property after the borrower purchases a new primary residence.
Under the new guidelines, the lender cannot use a lease agreement to establish rental income from the departing residence. Instead, the lender must support the projected rent with market data. The lender may use market-analysis tools such as MLS, Zillow or Redfin. However, the lender must generally obtain at least three comparable rental properties from the same market area when possible.
The lender then uses 75% of the supported monthly market rent and subtracts the property’s complete PITIA payment. Positive income can only offset that property’s payment. The lender includes any resulting loss in the borrower’s debt-to-income ratio.
When the borrower has less than 12 months of property-management experience, the lender may also require six months of additional reserves for the departing residence.
Short-Term Rental Income
Fannie Mae also created specific guidelines for short-term rental properties. The property must be a one-unit investment property, and its use as a short-term rental must comply with applicable local registration and licensing requirements. The lender cannot treat income from an accessory dwelling unit as short-term rental income under this section.
For a purchase, the lender may use a standard long-term rent schedule or properly validated short-term rental data. Short-term data generally requires three comparable properties and information about rental rates and the number of days rented.
When using short-term market rents, the lender applies only 50% of the supported gross rental amount before subtracting PITIA. The remaining 50% accounts for vacancy and maintenance expenses.
Recently Purchased Investment Properties
The new guidance also addresses an investment property purchased within 45 days of the application date for another mortgage. The lender cannot use a lease agreement to establish rent for that recently purchased investment property. Instead, the lender must use acceptable market-rent documentation.
After applying the 75% rental factor and subtracting PITIA, the lender may use positive income to offset the property’s payment. However, the lender must include a rental loss in the borrower’s debt-to-income ratio.
Stronger Lease Requirements
Fannie Mae also strengthened its general standards for lease agreements. The updated standards address minimum lease terms and leases that differ from market rent. They also cover evidence that a new lease has taken effect and restrictions involving family members or other interested parties. In addition, the first lease payment must begin no later than the first payment on the new mortgage transaction.
What This Means for Borrowers
Rental income can still help a borrower qualify. However, property type, transaction timing, rental history and available documentation now have an even greater impact on how much income the lender can use.
If you are planning to convert your current home into a rental, purchase a short-term rental, buy multiple investment properties, use projected rent to qualify, or refinance an existing rental property, it is wise to review the guidelines before entering into a contract.
The Chris Jordan Mortgage Team can review the property, anticipated rental income and documentation early in the process. As a result, you can better understand how the lender may treat that income.
Call (240) 670-5090, email CJMT@mainstreethl.com, or begin your prequalification online.
This article is a general overview and does not replace Fannie Mae’s complete underwriting requirements. Loan eligibility is subject to current guidelines, documentation and underwriting approval.
Sources: Fannie Mae Selling Guide Announcement SEL-2026-08, departing-residence requirements, and short-term rental requirements.
