Want to Keep Your Katy, TX Home as a Rental When You Buy Your Next Home? Fannie Mae Changed the Rules

What if you want to buy your next home but don't want to sell the Katy, TX home you already own?

Maybe you have a low mortgage rate you don't want to give up.

Maybe you've built substantial equity.

Maybe the home could make sense as a long-term rental.

Or maybe you've simply thought:

"Instead of selling this house, I'll rent it out and use the rental income to help me qualify for the next one."

If your next mortgage will be underwritten using Fannie Mae guidelines, that last part deserves attention before you start shopping for your next home.

Fannie Mae updated its Selling Guide on September 2, 2026 and established new requirements for rental income from what it calls a "departing residence."

One of the biggest changes?

A lease agreement is not permitted to establish rental income from a departing residence under the new Fannie Mae rules.

And that's not the only change that could affect how much a move-up buyer qualifies for.

Important timing note: Fannie Mae says lenders may apply the September 2026 rental-income changes immediately but must implement them no later than November 1, 2026. If you're considering keeping your current home as a rental, ask your lender which requirements are being applied to your loan.

Fannie Mae Selling Guide: Rental Income From a Departing Residence

What Does Fannie Mae Mean by a Departing Residence?

Fannie Mae defines this situation as a primary residence that will be vacated and converted to an investment property when the borrower purchases a new primary residence.

In everyday language:

You live in House A today. You buy House B to become your new primary home. Instead of selling House A, you keep it and turn it into a rental.

That's the scenario we're discussing.

It is increasingly worth discussing with move-up homeowners because selling isn't the only option a homeowner may be considering.

But whether keeping the old home actually works involves two separate questions:

1. Does keeping the property make sense as a real estate and investment decision?
2. How will keeping the property affect your ability to qualify for the next mortgage?

I can help with the first question from the real estate side.

The second belongs with your mortgage lender.

Can I Just Sign a Lease on My Current Home and Use That Rent to Qualify?

Not under Fannie Mae's new departing-residence documentation rule.

This is probably the most important change for homeowners to understand.

Fannie Mae's current Selling Guide specifically states that lease agreements are not permitted for a departing residence when determining the applicable rental income.

Instead, Fannie Mae says the lender may document market rent using:

• A complete appraisal report that includes market rents
• A Single-Family Comparable Rent Schedule, Form 1007, for the occupied unit
• A market analysis using sources such as MLS, Zillow or Redfin

If market-analysis tools are used, Fannie Mae requires at least three comparable rental properties, preferably within the same market area, subdivision or project when possible.

That means simply finding a tenant willing to sign a $3,000-per-month lease does not mean $3,000 automatically becomes the gross monthly rent used under this Fannie Mae departing-residence rule.

Why Does Market Rent Matter?

Because what a homeowner hopes to receive in rent and what comparable rental properties support are not necessarily the same number.

This is an area where your REALTOR® and lender can work together while staying within their respective roles.

On the real estate side, I can help evaluate the local rental market and look at comparable leased and available properties.

The lender determines what documentation is required and what rental-income amount can actually be used for mortgage qualification.

I don't want a homeowner making the decision to keep a property based on an assumed rental number that the lender cannot use.

Does Fannie Mae Use 100% of the Market Rent?

No.

Under the new departing-residence rule, Fannie Mae instructs the lender to multiply the monthly gross market rent by 75%.

The lender then subtracts the departing residence's PITIA.

PITIA generally refers to:

• Principal
• Interest
• Real estate taxes
• Property insurance
• Applicable association dues

This produces what Fannie Mae calls the adjusted monthly net rental income.

What Does the 75% Rental-Income Rule Look Like?

Let's use a simplified example for educational purposes.

Estimated monthly market rent: $2,800

Fannie Mae's calculation starts with:

$2,800 × 75% = $2,100

Now suppose the existing home's monthly PITIA is:

$2,400

The calculation becomes:

$2,100 - $2,400 = -$300

Under Fannie Mae's departing-residence guidance, that negative $300 is included in the borrower's debt-to-income ratio.

That's important because the homeowner might have initially looked at the situation this way:

"I'm collecting $2,800 and my payment is $2,400, so the property produces $400 per month."

But that isn't how this Fannie Mae qualifying calculation works.

The lender's qualifying calculation and the property's actual future cash flow are two different analyses.

What if 75% of the Rent Is More Than My Current House Payment?

Let's change the same example.

Market rent: $2,800

75% of market rent: $2,100

Now suppose the departing residence's PITIA is only:

$1,900

Mathematically, that's a positive $200.

But under Fannie Mae's departing-residence rule, positive adjusted net rental income can only be used to offset the PITIA of the departing residence.

The extra $200 cannot be added as additional qualifying rental income under this rule.

That's another reason a homeowner shouldn't assume:

"My old house will produce extra income, so that will help me qualify for an even larger mortgage."

For this particular Fannie Mae scenario, that isn't how the calculation works.

Could Keeping My Current Home Actually Hurt My Debt-to-Income Ratio?

Yes, potentially.

If 75% of the documented market rent is less than the property's PITIA, Fannie Mae says the resulting negative amount must be included in the borrower's debt-to-income ratio.

That doesn't necessarily mean the buyer won't qualify.

It means the lender needs to calculate the actual impact.

This is why the timing of the conversation matters.

I would much rather discover this before a buyer falls in love with the next home and writes an offer.

What About Cash Reserves?

There is another important requirement in Fannie Mae's updated guidance.

If the borrower has less than 12 months of property-management experience, Fannie Mae requires the lender to verify six months of reserves covering the PITIA obligation for the departing residence.

Fannie Mae also says this six-month reserve requirement is in addition to any applicable reserves required for multiple financed properties.

That can matter considerably for a homeowner who has substantial equity but relatively limited liquid savings after the down payment and closing costs on the next house.

Equity in the existing home and available cash reserves are not the same thing.

What Counts as Property-Management Experience?

Fannie Mae has separate guidance regarding how lenders establish property-management experience.

For example, its general rental-income guidance discusses documentation through federal tax returns and, in certain circumstances, a fully executed lease dated at least 12 months before the loan application.

This is an area where I would not recommend a homeowner attempt to determine eligibility from a checklist on the internet.

Ask the lender to review your specific history and tell you what documentation applies.

Does This Mean I Shouldn't Keep My Katy Home as a Rental?

No.

This isn't an argument for selling.

It isn't an argument for keeping the property either.

It's an argument for running the numbers before making the decision.

Keeping a current home could potentially make sense when:

• The expected rent is supported by the local rental market
• The homeowner has sufficient reserves
• The financing for the next purchase works
• The owner is comfortable becoming a landlord
• The expected income and long-term investment objectives justify keeping the property
• The homeowner does not need the existing equity to complete the next purchase

Selling could potentially make more sense when:

• The homeowner needs the equity for the next down payment or closing costs
• Keeping two properties creates uncomfortable financial pressure
• The expected rent does not adequately support the costs and risks of ownership
• The owner doesn't want landlord or property-management responsibilities
• Selling materially improves the financing strategy for the next home

There can also be tax implications associated with selling a former primary residence after converting it to a rental.

I am not a CPA or tax attorney, so those questions should be reviewed with an appropriately qualified tax professional.

What if I Have a Very Low Mortgage Rate on My Current Home?

This is one of the reasons homeowners may be reluctant to sell.

If you financed or refinanced when mortgage rates were substantially lower, giving up that existing loan can feel difficult.

That's understandable.

But a low mortgage rate by itself doesn't make a property a good rental investment.

We still need to look at the whole property:

• Realistic market rent
• Mortgage payment
• Property taxes
• Insurance
• HOA costs
• Maintenance
• Potential vacancy
• Property-management expenses, if applicable
• Expected future capital expenditures
• Available equity
• Your long-term objectives

A low interest rate is an asset. It isn't the entire investment analysis.

Does This Fannie Mae Rule Apply to Every Mortgage?

No.

This article is specifically discussing Fannie Mae's departing-residence rental-income requirements.

It should not be interpreted as a universal rule for every mortgage.

Freddie Mac, FHA, VA, jumbo, portfolio and non-QM financing can have different requirements.

Individual lenders may also have additional requirements within applicable program guidelines.

That's another reason the lender should be involved early.

I am a REALTOR®, not a mortgage lender, and I do not determine loan qualification or underwriting requirements.

When Do the New Fannie Mae Rules Take Effect?

Fannie Mae issued the updated rental-income guidance on September 2, 2026.

According to Fannie Mae, lenders may apply the September rental-income changes immediately but must implement them no later than November 1, 2026.

Fannie Mae: Income Assessment Updates and Implementation Timing

So if you're planning a move now, don't assume every lender is necessarily operating under exactly the same implementation timing today.

Ask.

Should I Find a Tenant Before I Buy My Next Home?

This is where the new rule changes the conversation.

If you're pursuing financing subject to these Fannie Mae departing-residence requirements, signing a lease does not replace the required market-rent documentation for the departing residence.

That doesn't mean there are never practical reasons to secure a tenant.

It means:

Don't sign a lease because you assume the lease itself will establish the rental income your lender needs to qualify you for the next mortgage.

Talk with the lender first.

There are also real-estate considerations to discuss before committing your current home to a tenant, particularly if selling the property remains one of your alternatives.

What Should I Do Before Shopping for My Next Katy, TX Home?

If your plan is:

"Buy another house and turn this one into a rental,"

I would want to work through the strategy before we start seriously shopping.

On the real estate side, we can evaluate:

• What your current home might realistically sell for
• What comparable rental properties support for market rent
• Current rental competition
• The likely costs and responsibilities of keeping the property
• How much equity you may be leaving in the existing home
• Whether selling or keeping better fits your goals

Then I want your lender answering:

• How will the departing residence affect my qualification?
• What market-rent documentation will you require?
• How much rental income can you actually use?
• How will the existing PITIA affect my debt-to-income ratio?
• What reserve requirement applies?
• Do I meet the applicable property-management experience requirements?
• Which version of Fannie Mae's updated guidance are you currently implementing?
• Are there other loan programs I should discuss with you?

Those answers should come before the offer, not after it.

Thinking About Moving Up Without Selling Your Current Katy Home?

You don't have to decide immediately that your current home must be sold.

And you shouldn't decide that it must become a rental simply because you don't want to give up the mortgage you already have.

Let's compare the alternatives.

I can help you evaluate your current Katy, TX home from both the resale and rental sides, look at the homes you're considering for the next move and coordinate with your lender so the real estate strategy is based on financing numbers they have actually reviewed.

Sometimes the answer may be:

Sell the current home.

Sometimes it may be:

Keep it and rent it.

But whichever direction you choose, it's better to make that decision before you're under contract on the next house.

Call or text me at 281-549-8099 or learn more about working with me at Jonathan.NestAhead.com.

Jonathan McNabb, REALTOR®
Broker/Owner, Nest Ahead
Katy, TX and Greater Houston
281-549-8099
Jonathan.NestAhead.com
Local Roots | Global Reach

This article is provided for general real estate education and is not mortgage, lending, underwriting, legal, tax, investment or financial advice. I am a REALTOR®, not a mortgage lender. Fannie Mae guidelines, lender requirements and loan programs can change, and individual circumstances vary. Buyers should obtain financing guidance specific to their circumstances from an appropriately qualified mortgage professional and tax or legal advice from the appropriate professionals when needed. Fannie Mae's September 2026 rental-income changes may be implemented by lenders immediately and must be implemented no later than November 1, 2026.