The Lease Is Signed. The Departing-Residence Math Isn’t Done.
A borrower is buying a new primary home and plans to rent the one they already own. The lease is signed, the deposit is in hand, and the projected rent looks high enough to cover the old payment. It’s tempting to treat that lease as the answer.
For a Fannie Mae file using the September 2026 rental-income update, it isn’t.
Fannie Mae’s new departing-residence section says a lease cannot establish the monthly gross rent for the home being vacated. The lender must support market rent, then apply the qualifying calculation and reserve rules. Lenders may adopt the September changes now, but must use them by December 1, so confirm which version the lender is applying before quoting a number.
That one policy detail changes the conversation from “Do we have a lease?” to “Do we have a supportable rental-income plan?”
What changed, and why the distinction matters
Fannie Mae reorganized its rental-income guidance on September 2, adding a dedicated section for a principal residence being converted to an investment property when the borrower buys another home. The change establishes a specific evidence path for the departing residence.
The lender may determine monthly gross rent from an appraisal with market rents, Form 1007, or a market-analysis tool supported by at least three comparable rentals. Those rentals should come from the same market area when possible. A signed lease is not the permitted basis for the calculation.
The practical takeaway: a real tenant and a qualifying rent figure are related, but they aren’t interchangeable.
Quick take: First identify the lender’s current policy version. If the September update applies, order or gather market-rent support early. Don’t build the preapproval around the lease amount and wait for underwriting to replace it.
Start with evidence, not the borrower’s expected rent
Suppose the lease calls for $3,000 per month, but Form 1007 supports $2,700. The file can’t count the extra $300 simply because the tenant agreed to pay it. The calculation starts with eligible market-rent documentation.
If the lender uses an online market-analysis tool, save the actual comparison set. Fannie Mae calls for at least three comparable rentals. A headline estimate without the supporting properties and date is not a documented market analysis.
Before the math begins, the lender must document that the borrower has a current housing payment to use departing-residence rent for qualification. That detail can get lost when the team is focused on the new purchase.
Run the offset math before quoting buying power
For the departing residence, Fannie Mae’s updated calculation is straightforward:
Multiply supported monthly gross rent by 75%.
Subtract the departing residence’s full PITIA.
If the adjusted monthly net rental income is positive, it may offset the old home’s PITIA only. It doesn’t become unrestricted positive income. If the result is negative, the loss belongs in the debt-to-income ratio.
Using the $2,700 market-rent example, 75% produces $2,025. If PITIA is $2,200, the file has a $175 monthly loss. That is a different qualifying result from assuming the $3,000 lease covers the old payment, and it can change product fit or cash-to-close planning.
The Fannie Mae DU rental-income job aid explains how to enter net rent for a retained residence, including why a zero entry may not behave as expected. The lender owns the final calculation and data entry; the broker can make sure assumptions are visible before submission.
Reserves may be the quiet deal constraint
When the borrower has less than 12 months of property-management experience, the lender must verify six months of reserves for the vacated property’s PITIA. Those reserves are in addition to any requirement for multiple financed properties.
Acceptable market rent can still leave a cash-planning issue. Before the borrower moves funds or changes the down payment, confirm which dollars must remain available for reserves.
Build one clean departing-residence handoff
Put the key facts in one place:
the lender and confirmed policy version being applied;
the old home’s occupancy plan and move-out timing;
the permitted market-rent source, date, and supported amount;
current PITIA, the 75% calculation, and the resulting offset or loss;
documented property-management history and the reserve requirement.
Keep the signed lease in the file because it still helps explain the borrower’s real-world plan. Just don’t label it as the document that establishes qualifying rent under the updated departing-residence section.
Keep the same information in the LOS, processor notes, and lender submission. ARIVE isn’t required, but teams using it can create a repeatable checklist and condition trail. EPC’s ARIVE training library covers workflow fundamentals; EPC can also assist with onboarding and file structure.
Give the borrower a number with a label
A useful borrower update might sound like this: “Your lease shows the rental plan, but the lender has to qualify the old home using supported market rent and its own calculation. We’re confirming that amount, the old payment, and the reserve requirement before we rely on it.”
This leaves room for lender overlays or another agency path. If the calculation changes the closing plan, EPC’s rate-lock and closing handoff guide offers a useful pattern: identify the constraint, name the next decision, and update the borrower early.
Turn the rental plan into a file-ready handoff
If a departing residence is creating uncertainty, EPC can help keep market-rent evidence, PITIA, reserves, and lender questions aligned through underwriting.
Have you already changed how your team documents departing residences? Share the workflow question with EPC on Facebook.
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Educational note
This article is for general educational purposes, not underwriting, legal, tax, or compliance advice. Guidance, lender adoption dates, overlays, AUS findings, and loan facts can change requirements. Confirm current requirements with the lender responsible for the file.
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