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New Departing Residence Rental Income Rules: Six Months of Reserves Starting December 1
Starting December 1, Fannie Mae will require six months of reserves on a departing residence when your borrower has less than 12 months of property management experience. That's most move-up buyers keeping their first house.
The reserve requirement is part of a full rewrite of Fannie's departing residence rental income rules. Leases are out, market rent is in, and positive rent can only offset the old payment. But the reserves are the change that will decide whether these files close.
When this takes effect
Fannie published the new rules on September 2. They're required for applications dated December 1, 2026 or later. Lenders can adopt them early, and Fannie is encouraging them to. As of publication, we haven't seen a lender publicly announce early adoption.
So for the next two months, your lender could be on either version. Ask which one before you build the numbers.
The new reserve requirement
Here's the new language:
"The lender must verify the borrower has six months of reserves to cover the PITIA obligation for the vacated property when the borrower has less than 12 months of property management experience."
"The six-month reserve requirement calculated by the lender is in addition to any reserves required for multiple-financed properties."
Fannie Mae Selling Guide B3-3.8-05, Rental Income from Non-Subject Property: Departing Residence
Two things to take from that:
It's based on the old house's payment. Six months of principal, interest, taxes, insurance, and HOA on the home they're leaving, not the new one.
It stacks. It's on top of whatever reserves the file already needs for other financed properties.
Run it. The old house payment is $1,900. Six months is $11,400 sitting in the bank after closing, for that house alone.
Now think about who buys before they sell. Usually somebody whose cash is tied up in the house they're leaving. That's exactly who this hits.
I think this reserve line is going to kill more departing residence deals than anything else in the rewrite.
Who's exempt
Borrowers with at least 12 months of property management experience don't need the six months. If your borrower has owned and rented property before, get that history documented early, usually through tax returns showing the rental. Ask your lender what it will accept as proof.
That history used to do more. Under the current rule, it lets positive rent count as income. Under the new rule, it only takes the reserve requirement off the file.
The rest of the departing residence rental income rewrite
The new lease rule. One sentence:
"Lease agreements are not permitted for any departing residence."
Fannie Mae Selling Guide B3-3.8-05
Signed tenant or not, underwriting works off market rent.
Where the rent comes from. Three options:
"[The lender] must include all documentation used to determine monthly market rents in the loan file. Documentation may include:
a complete appraisal report that includes market rents, or
a Single-Family Comparable Rent Schedule (Form 1007) for the occupied unit, or
market analysis tools to determine the gross rental income amount, such as Zillow, Redfin, MLS, etc. When using these tools, the lender must obtain at least three comparable rental properties."
Fannie Mae Selling Guide B3-3.8-05
The first two cost your borrower money, and the 1007 is on its way out. Once UAD 3.6 is mandatory on November 2, the form numbers will be retired, and rent will move inside the new appraisal report. For a departing residence, lenders are still accepting the standalone rent schedule for now. Check yours. More on that in UAD 3.6: What's Actually Changing on Your Appraisals.
The market analysis is the new option, and it doesn't need an appraiser. Fannie's text sets one hard requirement: at least three comparable rental properties, obtained by the lender. Some lender blogs add that the comps should come from the same market area, and the same subdivision when possible, but Fannie's wording doesn't say that. A Rent Zestimate isn't three comps.
As of publication, we haven't seen a lender announce how it will handle this. Don't assume it's free, either. Vendors are already pitching paid rental valuation tools as the alternative to the rent schedule. Until your lender publishes its process, ask two questions: who pulls the comps, and will they accept a package you put together?
The math. Same 75%, with a hard cap:
"To determine adjusted monthly net rental income (ANRI), the lender must
multiply the monthly gross rent(s) by 75% for the net rental income amount, then
subtract the PITIA for the departing residence.
If ANRI is positive, the lender may use rental income to offset the departing residence PITIA only. If ANRI is negative, the lender must include the amount in the DTI ratio."
Fannie Mae Selling Guide B3-3.8-05
There is no longer a carve-out for landlord history. Market rent of $2,800 on a $1,900 payment gives you $2,100, which is $200 positive. Under the current rule, a borrower with a year of landlord history added that $200 to income. Under the new rule, it wipes out the $1,900 payment and stops there.
Current rule vs. December 1
Current Fannie rule | New rule, required December 1 | |
Lease | Fully executed lease required | Not permitted |
Rent support | Appraiser's rent schedule, or two months of rent received | Appraisal with market rents, rent schedule, or market analysis with three comps |
Calculation | 75% of lease rent minus PITIA | 75% of market rent minus PITIA |
Positive cash flow | Counts as income with 12 months of landlord history | Offsets the old payment only |
Reserves for the departing home | No separate requirement | Six months of PITIA if under 12 months of landlord history |
The security deposit check was never required under the current rule. It's been optional for years.
What to ask now
Files you take now could close after December 1, and your lender could already be on the new rule. So change the first-call questions today:
Have you ever been a landlord, and can we document it?
If we keep this house, will you have six months of its payments left in the bank after closing?
Which version is the lender underwriting to?
And know where the file is going. As of publication, Freddie Mac hasn't announced a matching change and still works off a lease, so a Freddie file plays by different rules.
When a departing residence shows up on a file, the processor's call covers what underwriting needs: full statements for every account that counts toward reserves, and tax returns if the borrower has managed rentals before: one consolidated request, a date on every item, and all of it in the notes.
Whether your borrower keeps the house, sells it, or restructures the deal is your call, not ours. If the conversation drifts there, you get a heads-up text, and we get you two on the phone.
Guideline references reflect our understanding at publication. Confirm against the current guide and your lender's overlays before you rely on them.
Bottom line
For years, the question on a departing residence was whether the borrower had a tenant. Starting December 1, it's whether they have six months of that house's payment left after closing.
Ask it on the first call. Finding out about a reserve condition two weeks before closing is much more expensive.
Moving up and keeping the old house?
Make Sense Processing is contract processing for loan officers in the broker channel. One consolidated document request, a borrower call every time, notes you can actually read, and status you never have to chase.
For mortgage professionals only. This is a business-to-business communication for loan originators and brokers. It is not intended for consumers and is not an offer of credit. Make Sense Processing provides contract loan processing services to licensed originators. We do not originate loans, take loan applications, or offer, negotiate, or advise on rates, terms, programs, or qualification. Nothing here is legal or compliance advice, and guidelines vary by lender, program, and state, so verify anything you plan to rely on.
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