Keeping the Old House as a Rental? A Lease May Not Be What Your Mortgage Lender Needs

A homeowner finds the next house and plans to keep the current one as a rental. The expected rent covers the old payment. On paper, it looks straightforward.

The mortgage calculation may tell a different story.

Under Fannie Mae's revised departing-residence policy, documented market rent replaces a lease agreement as the rent evidence. The revised policy is mandatory for applications dated December 1, 2026 or later, with earlier lender adoption allowed. The rent can be supported through an appraisal, a comparable rent schedule or market-analysis tools. When those tools are used, the lender must obtain at least three comparable rentals.

The lender then takes 75% of the documented gross rent and subtracts the old property's qualifying payment, including principal, interest, taxes, insurance and applicable association dues.

For example, $3,000 in documented monthly rent becomes $2,250 in that calculation. If the old payment is $2,500, the remaining $250 monthly loss is included in the borrower's debt-to-income calculation. If the rent calculation produces a positive result, it may only offset the old payment, not create extra qualifying income under this departing-residence rule.

Cash after closing matters too. Borrowers with less than 12 months of property-management experience need six months of reserves for the departing property's qualifying payment, in addition to other applicable reserve requirements.

Fannie Mae reissued its September 2 announcement on September 23, moving mandatory implementation to loans with application dates on or after December 1, 2026. Lenders may adopt the revised rules earlier; for an earlier application, confirm which policy the lender is using. These are Fannie Mae rules, not a statement about every mortgage program. Multi-unit properties and older applications need their own review.

For New Jersey homeowners, the financing is only part of the decision. Municipal rental requirements, registration, insurance, repairs and vacancies also need a look.

The useful first step is a two-property calculation before making an offer: which rent evidence counts, how much of the old payment remains in qualifying and how much cash must be left after closing.

By Sam Alpert, senior loan officer at Spring Home. NMLS #1961555. Spring Home Company Incorporated, NMLS #2741914. Equal Housing Lender.