If you apply for a Fannie Mae conforming loan on or after December 1, 2026, your lender must use Fannie Mae's rewritten rental income rules. Most rent is still counted at 75% of the gross amount minus the property's full mortgage payment. The rewrite adds new short-term rental rules that count 50% of rent, stops lenders from using a lease for a home you are moving out of or a rental bought within 45 days of the new loan, and tightens lease standards. It also spells out a 12-month property management test before positive rent can add to your qualifying income.
Fannie Mae announced the changes in Selling Guide Announcement SEL-2026-08 on September 2, 2026, then reissued it on September 23 to move the required date from November 1 to December 1. Lenders are encouraged to use the new rules now and must use them for every loan with an application date on or after December 1, 2026. Some older copies and trade articles still show November 1.
This guide is for salaried professionals buying or refinancing a one- to four-unit rental with a conventional loan. It was checked against Fannie Mae's Selling Guide on October 30, 2026. It covers Fannie Mae only. Freddie Mac, FHA, VA and DSCR lenders follow their own rules, and individual lenders can add stricter requirements (called overlays). This is general education, not lending advice.
The basic formula
Fannie Mae calls the result adjusted net rental income, or ANRI. For most long-term rentals it works like this (B3-3.8-02):
- Gross monthly rent × 75% = net rental income. The other 25% covers vacancy and maintenance.
- Net rental income minus PITIA = ANRI. PITIA is the property's principal, interest, taxes, insurance and association dues.
For a rental that is not your home, a positive ANRI is added to your income and a negative ANRI is added to your monthly debts. The rental's PITIA is not counted again as a debt. If you own several rentals, the lender calculates each one separately and adds the results together (B3-3.8-01).
Rent from a unit in a two- to four-unit home you live in is treated differently. The lender adds the qualifying rent to your income and counts the full PITIA as a debt. It cannot net the two.
When a property is already on your tax return, the lender usually starts from Schedule E instead of 75% of rent. It takes the net figure, adds back depreciation, interest, HOA dues, taxes and insurance, divides by the months the property was in service, and subtracts PITIA.
The rules, scenario by scenario
| Scenario | Rent the lender starts from | Factor | If ANRI is positive | Lease allowed? |
|---|---|---|---|---|
| Rental you are buying (long-term) | Appraiser's market rent (Form 1007 or 1025), plus any lease you take over | 75% | Full amount counts with 12+ months of management experience; otherwise it only offsets the PITIA | Only a transferred lease, supported by market rent |
| Rental you are refinancing | Schedule E cash flow, or 75% of the lease if not yet on your return | 75% when using a lease | Same experience test | Only in listed situations |
| Other rentals you own | Schedule E cash flow, or 75% of the lease if not yet on your return | 75% when using a lease | Same experience test | Only in listed situations |
| Short-term rental you are buying (one unit, investment only) | Long-term market rent on Form 1007, or validated short-term data from three comparables | 50% | Offsets the PITIA only | Not applicable |
| Home you are moving out of | Market rent from an appraisal, Form 1007 or three comparables | 75% | Offsets that home's PITIA only | No |
| Rental bought within 45 days of the new application | Appraisal market rent, Form 1007 or three comparables | 75% | Offsets the PITIA only | No |
| ADU on a one-unit home you live in | Market rent for one existing ADU | 75% | Capped at 30% of total qualifying income | Same lease rules |
Sources: B3-3.8-01, B3-3.8-02, B3-3.8-03, B3-3.8-04, B3-3.8-05 and B3-3.8-06. The ADU limit applies only to purchases and limited cash-out refinances.
The 12-month experience test
Positive rental income can only increase your qualifying income if you have at least 12 months of property management experience. Lenders usually prove it with your latest signed Form 1040, including Schedules 1 and E, showing a property rented for 365 fair rental days. Business returns with Form 8825 also work. If a property was owned for a year but not rented all year on the return, a 12-month lease or two years of returns can fill the gap. Without that history, rent can cancel out the property's own payment but cannot add spare income.
The current housing payment test
To use rent from the property you are buying, you must show a current housing payment: rent, a mortgage payment, or property taxes on a home you own outright. Lenders can verify it with six months of bank statements or cancelled checks, a letter from a management company, or your latest property tax bill. For other rentals, this test is waived once you have received rent from that property for at least a year. If you live rent-free with family, raise this early.
Short-term rentals
Short-term rental income now has its own section. The property must be a one-unit investment property that is legally allowed to operate as a short-term rental, including local registration and licensing. Income cannot come from an ADU. For a purchase, the lender uses either long-term market rent from Form 1007 or validated data from MLS or a property management company covering three comparable short-term rentals: their rates, days rented last year and anything that could affect short-term use. That figure is multiplied by 50%, and any positive result only offsets the payment. For a refinance of a property already on Schedule E, the lender uses 12 months of Schedule E cash flow.
Homes you are moving out of
If you are buying a new home and keeping the old one as a rental, the lender now uses market rent, not a signed lease. Leases are not allowed for a departing residence. Positive income only offsets the old home's PITIA. If you have less than 12 months of management experience, you also need six months of that home's PITIA in reserves, on top of any other reserve requirement.
Stricter lease standards
A lease can only set qualifying income in specific cases, such as a lease you take over at purchase, a property bought since your last tax return, a property placed in service this year, or a major renovation that interrupted rent. For a property that is not yet on your tax return:
- A lease signed within two months of your application must run at least six months, with the first rent due on or before your first mortgage payment.
- The tenant cannot be a family member or an interested party in the deal.
- You must show the lease is real: two consecutive months of identifiable rent deposits, or the security deposit and first month's rent with proof of deposit, or an independent management agreement with two months of rent receipts.
If the deposits and the lease amount differ, you or your manager must explain why in writing.
Documents to bring your lender
Gather these before you apply. Your lender may ask for more.
- Your latest signed Form 1040 with Schedules 1 and E. If a property was out of service for part of the year, have two years ready.
- Business tax returns with Form 8825 if any rental is held in a partnership or S corporation.
- Proof of your current housing payment: six months of bank statements or cancelled checks, a management company letter, or your latest property tax bill.
- A PITIA breakdown for every financed property: mortgage statement, tax bill, insurance declarations page and HOA statement.
- Leases, only where they are allowed, plus two months of rent deposits, or the deposit and first month's rent, or an independent management agreement with rent receipts.
- Closing statements for any property bought since your last tax return, including anything bought within 45 days of this application.
- Renovation records if Schedule E shows fewer than 365 fair rental days, so the lender can see why the property was out of service.
- Short-term rental proof: local registration or license, plus any comparable data your manager can supply.
- Reserve statements showing six months of PITIA for a departing residence if you have less than 12 months of management experience.
If you track rent, deposits and expenses in one place, such as the rental property expense spreadsheet, most of this pack is a quick export.
A hypothetical example
Every figure below is invented to show the math. None of it describes a real borrower or a real loan.
A borrower earns $12,000 a month, pays $3,000 a month on their own home and has $500 in other monthly debts. They are buying a one-unit rental with a PITIA of $1,650. The appraiser's Form 1007 shows market rent of $2,400.
| Step | With 12+ months of management experience | With less than 12 months |
|---|---|---|
| Net rental income ($2,400 × 75%) | $1,800 | $1,800 |
| ANRI ($1,800 − $1,650) | +$150 | +$150 |
| Added to income | $150 | $0 (offsets the PITIA only) |
| Qualifying income | $12,150 | $12,000 |
| Monthly debts ($3,000 + $500) | $3,500 | $3,500 |
| Debt-to-income ratio | 28.8% | 29.2% |
Now assume the same borrower buys it as a short-term rental instead. Three comparables average $180 a night and 200 nights rented a year. That is $36,000 a year, or $3,000 a month in our illustration; ask your lender exactly how it converts the figure. At 50%, net rental income is $1,500. ANRI is $1,500 − $1,650 = −$150, so $150 is added to monthly debts: $3,650 ÷ $12,000 = 30.4%.
The gap between the long-term and short-term results is a reason to run both cases before you make an offer, not proof that one strategy is better.
What rental investors should do before December
- Check your application date. It decides which rules apply, and many lenders may already be using the new ones.
- Count your months of management history. If you are close to 12 months on Schedule E, timing an application after you file the return that shows it could change how much rent counts.
- Do not rely on a new lease to rescue the numbers. For departing residences and quick back-to-back purchases, the lender will use market rent.
- Ask about overlays. Some lenders apply stricter rules than Fannie Mae requires. The questions to ask a mortgage lender list is a good place to add this one.
- Know your alternatives. If agency rules do not fit, a DSCR loan underwrites the property's rent instead of your personal income, usually at a higher rate. The rental property loans guide compares the main options, and the financing hub collects Supermode's other financing guides.
Common questions
When do the new Fannie Mae rental income rules start?
Lenders must apply them to every loan with an application date on or after December 1, 2026. They were allowed to adopt them as soon as the September 2, 2026 announcement came out. The original November 1 date was moved in the September 23 reissue.
Can a first-time landlord use rent to qualify?
Partly. Without 12 months of property management experience, positive rent can offset the rental's own PITIA but cannot add to your income. A negative result still counts against you.
Can I use a signed lease on my old home?
No. Under the new rules, lenders cannot use a lease for a departing residence. They use market rent from an appraisal, Form 1007 or three comparable rentals.
How is Airbnb or other short-term rental income counted?
For a one-unit investment property, the lender takes long-term market rent or validated short-term data and counts 50%, and positive income only offsets the payment. Once the property is on your Schedule E, a refinance uses 12 months of tax-return cash flow. The Airbnb vs renting out article covers the operating tradeoffs.
Do these rules apply to Freddie Mac, FHA or DSCR loans?
This guide covers Fannie Mae's Selling Guide only. We have not verified a matching Freddie Mac change, and FHA, VA and DSCR lenders set their own rules. Ask your lender which guide your loan follows.
Does Fannie Mae limit how many financed properties I can have?
Yes, through separate multiple financed property rules in B2-2-03 that these changes do not replace. The how many mortgages can you have article covers the limits.
Sources checked October 30, 2026: Announcement SEL-2026-08, B3-3.8-01 General Rental Income Information, B3-3.8-02 Subject Property, B3-3.8-03 Short-Term Rental, B3-3.8-04 Non-Subject Property, B3-3.8-05 Departing Residence and B3-3.8-06 Purchases within 45 days. Fannie Mae updates its guide often, so confirm the current version with your lender.