Fannie Mae Just Made This Easier: Keep Your Home, Rent It Out, and Still Buy Your Next One
Guidelines around home loans are always changing, usually in ways that open up more options than people realize. So before you rule anything out, check with your lender first. There's no cost and no obligation to find out where you stand.
A change worth knowing about
Fannie Mae just updated its guidelines, and almost nobody is talking about it yet. It just got a lot easier to keep your current home, turn it into a rental, and still qualify for your next house.
No tenant lined up before closing. No signed lease required. No first month's rent or security deposit collected in advance.
For eligible departing residences, documented market rent can now be used to help offset your existing mortgage payment. Think Zillow, Redfin, or a pull from the MLS.
Why this matters right now
A lot of homeowners are sitting on mortgage rates around 3% or 4%, and they don't want to give that up. They want to move, but selling the current home means losing that rate for good.
So the alternative has always been to keep the home, rent it out, and buy the next one. Simple in theory, but qualifying was the hard part.
Under the old guidelines, using rental income from the home you were leaving usually meant you needed a signed twelve month lease, a deposit already collected, and first month's rent already collected. All before closing on the next house, while you might still be living there, still house hunting, and still unsure exactly when you'd move.
That created a timing problem that didn't make sense. You had to find a tenant and lock in a lease around a closing date you might not even have yet. For a lot of homeowners, that made keeping the house feel out of reach.
What's different
For an eligible departing residence, documented market rent can be used instead. Here's how it works:
We document the home's market rent. We use 75% of that amount. That income can help offset your existing mortgage payment.
Here's an example. Say your current home could rent for $2,400 a month. Seventy-five percent of that is $1,800. If your mortgage payment is $1,900, almost the entire payment could be offset for qualifying purposes, and you never had to find a tenant before closing.
If you're sitting on a rate you may never see again, that changes the conversation.
Reach out anytime to talk through what your options look like. No cost, no obligation, just clarity on where you stand. Let's have a conversation.
Warmest regards,
Liana Pomeroy
Senior Mortgage Loan Advisor
Equal Housing Lender | Licensed in CO, FL, CA, TN & TX
All loans subject to approval. Conditions apply.
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