You have a low rate on your current house and you do not want to give it up. So the plan is obvious: rent it out, use the rent to help you qualify, and buy the next one. Plenty of people will tell you that is how it works.
As of September 2 2026, on a conventional loan, it mostly is not how it works any more. The rule changed, it did not get much attention, and it is the single thing most likely to blow up your plan at underwriting.
So here is what actually happens now, by loan type, and what to do if the answer comes back no.
Fannie Mae’s Selling Guide, section B3-3.1-08, was updated on September 2 2026. The relevant line is short and it is unambiguous. The lender is not permitted to use a lease agreement to determine qualifying rental income when the investment property is a departing residence.
Read that again, because it undoes the standard advice. A signed lease on the house you are moving out of no longer does the job on its own.
What the lender needs instead is twelve months of documented property management experience. In other words, proof you have actually been a landlord for a year, not proof that you are about to become one. Any one of these satisfies it:
Notice what all four have in common. They look backward. There is no version of this where you sign a lease in March and use the rent in April.
This part catches people too. The qualifying rental income gets added to your total monthly income, and the full monthly payment on the departing house, principal, interest, taxes, insurance and HOA, gets added to your total monthly obligations.
The rent does not cancel out the payment. Both sides go on the application separately. So a house that rents for exactly what it costs you every month does not come out neutral in the debt ratio. It usually makes it worse.
If your current loan is FHA and you want to use the rent from the house you are leaving, HUD’s requirement is specific. You must be relocating to an area more than one hundred miles from your current principal residence, and the lender has to obtain an appraisal showing both the market rent and that you hold at least twenty-five percent equity in the property.
Both conditions, not either one. Moving across town does not qualify no matter how much equity you have, and having a job transfer three states away does not help if you are at ninety percent loan to value.
This one surprises people because it is the opposite of what they expect. FHA is the flexible program on down payment and credit, and the strict one here.
For most people asking this question, on a conventional or FHA loan, the answer is no. Not never, but not now. You are being asked to prove a year of landlord history you do not have yet, and nothing in the file substitutes for it.
I would rather tell you that in the first conversation than let you find it out three weeks into an application with an offer accepted and a closing date on the calendar.
That is the bad news and it is most of the internet’s answer to this question. Here is the part almost nobody gets to.
The obstacle is not the house and it is not the rent. It is that a conventional or FHA file measures you, and it wants a year of your history as a landlord before it will believe the rent is real.
A DSCR loan does not ask that question. It qualifies the property on the rent the property itself collects. Your personal income does not enter the file, your debt ratio does not enter the file, and your landlord history does not enter the file, because the loan is underwritten against the house.
Which opens a route that sidesteps the whole problem:
There is a real cost to all of this. DSCR and non-QM programs price higher than the conventional loan you are trying to keep. That trade is worth running properly rather than assuming, and it is exactly the conversation worth having before you list anything or sign anything.
On a conventional loan, generally not right away. As of September 2 2026 Fannie Mae does not permit a lender to use a lease agreement to qualify rental income from a departing residence. You need twelve months of documented property management experience instead, shown through a Schedule E with 365 Fair Rental Days, a Form 8825, or a lease already twelve months old at application. On FHA you must be relocating more than one hundred miles away and hold at least twenty-five percent equity. If you do not have the history, a DSCR loan on the departing house is usually the workable route because it qualifies on the property’s rent rather than on you.
Not on a conventional departing residence, not since September 2 2026. A lease can still count in other scenarios, and a lease dated at least twelve months before your application can help establish history on a property that has not hit a tax return yet. But signing a lease this month to support a loan next month no longer works the way it used to.
Less than you collect, and the bigger issue is how it is applied. On a departing residence the qualifying rental income is added to your income while the entire payment on that house, including taxes, insurance and HOA, is added to your debts. The two do not offset each other, so a property that breaks even in real life usually looks like a negative in the debt ratio.
HUD requires that you be relocating to an area more than one hundred miles from your current principal residence, and that the lender obtain an appraisal evidencing market rent and at least twenty-five percent equity in the property. Both conditions have to be met. A local move does not qualify regardless of equity.
Often yes, but not by forcing the conventional file. The usual fix is to move the departing house onto a DSCR loan so it qualifies on its own rent and stops consuming room in your ratio, then qualify for the new purchase on a program that measures your income accurately. For a self-employed borrower that is typically a bank statement or 1099 program.
Sometimes, and it is a real calculation rather than a rule. You are weighing what the low rate saves you against what keeping it costs you in lost buying power on the next house. Run both numbers before deciding. I will tell you when the answer is to leave the loan alone, because frequently it is.
Rules cited here come from the Fannie Mae Selling Guide B3-3.1-08, updated September 2 2026, and HUD Mortgagee Letter 2023-17. Guidelines change without notice and individual lenders apply overlays on top of them.
Want to know if the rent will carry it?
Send me two things: what you owe on it and what it would rent for. I will tell you whether the rent covers the payment, how much of it a lender will actually let you count toward the next house, and what you would need in reserves.
No application. No documents. Nothing that touches your credit.
Text me: 704-890-7168Or call the same number
Scott Hastings, NMLS #926762. Mortgages by Scott, a division of Arbor Financial Group. 121 N Main St Ste 202, Mooresville NC 28115. Equal Housing Opportunity. Occupancy terms are set by your loan documents and loan program guidelines, which change without notice. General information, not a commitment to lend or an offer of credit. Message and data rates may apply.
Scott Hastings is a Licensed Mortgage Loan Originator and founder of Mortgages by Scott, bringing more than 20 years of experience helping clients achieve their homeownership goals. A native Charlottean and graduate of Charlotte Christian School and East Carolina University, Scott specializes in mortgage solutions for self-employed entrepreneurs, real estate investors, luxury homebuyers, and families seeking a more personalized lending experience.
Based in Mount Ulla, North Carolina, Scott is known for his hands-on approach, straightforward guidance, and commitment to making the mortgage process simple and stress-free. When he’s not helping clients secure financing, he enjoys CrossFit, traveling with his wife Stacey to dressage competitions, and spending time with family and friends on their farm. His mission is simple: provide the right mortgage strategy with exceptional service, without the red tape.
