Fannie Mae Drops Lease Requirement for Departing Residences, Adds Short-Term Rental Guidelines

The binding constraint for a homeowner trying to buy their next house while keeping their current one as a rental has always been the lease. A lender would not count a dollar of future rental income against the old mortgage payment unless a signed lease and a deposited security check were already in hand—a sequencing trap that required finding a tenant for a house the owner was still living in.

As of September 2, that condition no longer holds. Fannie Mae has rewritten its conventional lending rules to allow market-supported rent to qualify a departing residence, removing the lease requirement entirely.[1][7][8]

The policy overhaul, issued under Selling Guide Announcement SEL-2026-08, fundamentally changes the math for move-up buyers. Under the previous framework, homeowners who wanted to retain their existing property as an investment had to navigate a logistical maze. They needed an executed lease agreement to offset their current principal, interest, taxes, and insurance (PITIA) payment, which often meant moving twice or carrying two full mortgages in their debt-to-income ratio.[6][8]

Now, lenders are instructed to use an appraiser's market rent schedule or a market analysis tool—such as the Multiple Listing Service, Zillow, or Redfin—pulling at least three comparable rentals from the same area. The lender takes 75 percent of that supported monthly market rent and subtracts the property's complete PITIA payment. If the result is positive, the old mortgage payment is fully offset. If it is negative, only the shortfall counts against the borrower's debt-to-income ratio.[2][7]

Fannie Mae is explicit about the shift away from the old documentation standard, noting that the new framework relies entirely on "market-supported rents, reserve requirements, and PITIA offset limitations rather than lease agreements." For buyers who have less than 12 months of documented property management experience, lenders will require six months of additional reserves for the departing residence to cover potential vacancies.[2][8]

The September 2 update also breaks new ground for investment properties, formally recognizing short-term rental income for the first time. Until this month, conventional guidelines had no specific topic for platforms like Airbnb and Vrbo, forcing lenders to either fit short-term revenues into long-term rental rules or push buyers toward specialized commercial loans.[5]

Under the new framework, short-term rental income can be used to qualify on a one-unit investment property, provided the property complies with all local registration and licensing requirements. To calculate the qualifying income, the lender applies a strict 50 percent haircut to the supported gross rental amount. This missing half is designed to account for the higher vacancy rates and maintenance costs associated with short-term guests.[1][2][5]

However, Fannie Mae placed a hard ceiling on how far that short-term income can stretch. The adjusted rental figure can only be used to offset the property's own PITIA payment. It never becomes additive income. A highly profitable Airbnb that generates far more than it costs will not increase a buyer's borrowing power by a single dollar; the best possible outcome is that the property's carrying cost becomes invisible in the buyer's debt-to-income ratio.[5]

The agency acknowledged that its previous rental income policies had become increasingly complex and difficult for lenders to apply consistently. "We have revised our rental income policy to simplify its overall structure, improve clarity, address policy gaps, and better align policy with real-world execution," Fannie Mae noted in the announcement.[1][8]

The new rules also standardize the treatment of investment properties purchased within 45 days of a mortgage application, barring the use of lease agreements to establish rent for those recently acquired assets. Instead, lenders must use acceptable market-rent documentation, applying the same 75 percent factor and offset limitations.[2][8]

Lenders are authorized to implement these changes immediately, and many have already begun underwriting to the new standard. The revised framework becomes mandatory for all conventional loan applications dated on or after November 1, 2026. For a move-up buyer mapping out a fall purchase, the elimination of the lease requirement removes the single largest hurdle to keeping their first home as a wealth-building asset.[3][6][8]