B3-3.8-05, Rental Income from Non-Subject Property: Departing Residence (09/02/2026)

The lender must document a current housing payment to use any rental income from the departing residence in qualifying¹ and 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. Comparable rental properties should be from within the same market area (including subdivision or project) when possible. When the departing residence is a multi-unit property, the market analysis information should be limited to the borrower-occupied unit.

Note: Lease agreements are not permitted for any departing residence.

In addition, for a multi-unit property, the lender must obtain the most recent year of individual federal income tax returns (IRS Form 1040) to support rental income received for tenant occupied properties.

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,² 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.³

If ANRI is negative, the lender must include the amount in the DTI ratio.³

Note: For multi-unit departing residences, the lender must calculate the rental income for tenant occupied units in accordance with the rental income for non-subject property guidance and only apply the vacancy factor to the borrower-occupied unit.

See B3-3.8-04, Rental Income from Non-Subject PropertyB3-3.8-04, Rental Income from Non-Subject Property and Treatment of Rental Income (or Loss) in B3-3.8-01, General Rental Income InformationB3-3.8-01, General Rental Income Information for additional information.

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.

Note: The six-month reserve requirement calculated by the lender is in addition to any reserves required for multiple-financed properties. Also, when converting the principal residence to an investment property, see B3-6-06, Qualifying Impact of Other Real Estate OwnedB3-6-06, Qualifying Impact of Other Real Estate Owned, for guidance in using that rental income to qualify the borrower.