On September 2, 2026, Fannie Mae published Announcement SEL-2026-08, restructuring how rental income requirements are presented and adding a new restriction on income documentation for recently acquired rental properties. The update becomes mandatory for all conventional loan applications dated November 1, 2026 or later. I'm Bond Peter Njoku (NMLS #2670329), based in Garland, TX, and rental income qualification is something I help Texas buyers navigate regularly — whether they're move-up buyers keeping their Garland starter home as a rental, investors with multiple DFW properties, or first-time buyers using house hacking on a duplex. Here's what the updated rules mean in plain terms and how to apply them to your situation.
How Does Fannie Mae Calculate Rental Income for Mortgage Qualification in Texas?
The foundational rule is the 75% rule: Fannie Mae counts only 75% of verified rental income toward your qualifying income. The remaining 25% is reserved for vacancies, repairs, and landlord expenses. This applies whether the rental is a single-family home, a condo, or a unit in a multifamily property you own.
For an existing rental property with a rental history: your lender looks at two years of Schedule E (Supplemental Income and Loss) on your federal tax returns, calculates the 24-month average, then uses the lower of that average or the current lease amount — and applies the 75% factor to the result. Example: if your Schedule E shows average net rental income of $1,800/month over two years, and your current lease is $2,000/month, the qualifying income is $1,800 × 75% = $1,350/month.
What Is Fannie Mae's New 45-Day Rental Income Rule (SEL-2026-08)?
This is the most important change from SEL-2026-08 for Texas investors and move-up buyers. If you acquired a rental property within 45 days of your loan application date, Fannie Mae no longer accepts a signed lease as documentation of rental income. Instead, the lender must establish rental income through one of three alternative methods:
- A full appraisal that includes a market rent estimate for the subject property
- A rental income evaluation from a licensed appraiser (a standalone opinion of market rent without a full appraisal)
- Documentation from a licensed property management company showing the property's rental potential based on comparable properties
This change closes a loophole where investors would purchase a rental, immediately sign a lease with a tenant (sometimes at an inflated rate), and present that lease as evidence of income on a new loan application. For legitimate investors who just recently acquired a property, the practical impact is a slightly longer documentation process — but the income can still be counted if a licensed professional documents the market rent.
Rental Income Qualification Scenarios: Texas Mortgage Cases
| Scenario | Income Type | Documentation Required | % Counted | Notes |
|---|---|---|---|---|
| Existing rental owned 2+ years with Schedule E | Documented rental history | 2 yrs tax returns (Schedule E) + current lease | 75% of lower of avg or lease | Most common scenario for move-up buyers |
| Rental owned 45+ days, no rental history yet | New rental income | Current signed lease | 75% of lease amount | Standard new rental rule (pre-SEL-2026-08) |
| Rental acquired within 45 days of application | Recently acquired rental | Full appraisal with market rent estimate OR licensed appraiser rental evaluation (no lease accepted) | 75% of appraiser's market rent | NEW per SEL-2026-08, mandatory Nov 1, 2026 |
| Primary residence 2–4 unit (house hacking) | Projected market rents from non-occupied units | Appraisal rent schedule (single-family comparable rents) | 75% of appraiser's market rents per unit | No rental history required; appraiser provides projected rents |
| FHA primary residence 2–4 unit | Projected rents | Appraisal rent schedule | 75% of appraiser's market rents | Same concept as conventional; FHA allows for primary residence |
House Hacking a DFW Duplex: A Real Example
One of the strategies I love helping DFW buyers execute is house hacking — buying a duplex or small multifamily property as your primary residence, living in one unit, and using the rental income from the other unit to offset your mortgage. In DFW, this is genuinely achievable in the $250,000–$350,000 range in neighborhoods like Garland, Mesquite, southern Plano, and parts of East Dallas.
I worked with a buyer in 2026 who found a duplex in Garland priced at $285,000. Each unit was approximately 900 square feet. The buyer planned to live in one unit and rent the other. The appraiser's rent schedule showed market rent of $1,375/month for the vacant unit. Under Fannie Mae's rules, 75% of $1,375 = $1,031/month of qualifying rental income was counted toward their DTI. Here's how the numbers worked:
- Purchase price: $285,000
- Conventional 5% down: $14,250
- Loan amount: $270,750
- Monthly P&I at 6.95%, 30yr: approximately $1,798/mo
- Property taxes (Garland, Dallas County 2% effective rate): $475/mo
- Homeowners insurance: $120/mo
- PITI total: $2,393/mo
- Less qualifying rental income: −$1,031/mo
- Net housing cost for DTI purposes: $1,362/mo
On a $72,000/year gross income ($6,000/month), the buyer's DTI on the net housing cost was about 23% — very comfortably under Fannie Mae's 45% guideline. Without the rental income counted, the DTI on the full $2,393 payment would have been 40% — still workable, but tight. The rental income made the difference between "borderline" and "strong approval."
Move-Up Buyers in Texas: Keeping Your Current Home as a Rental
Many DFW move-up buyers want to keep their starter home as a rental when they buy their next one — especially in this market, where locked-in rates below 4% make it painful to sell a property. Here's how the income treatment typically works:
If you've owned your current home for at least two years and it has been rented (with documented Schedule E income), your lender can offset the departing residence payment with 75% of the documented rental income. If there's no rental history yet, lenders have varying policies — some allow a signed lease to document projected income even without Schedule E history, while others require 30% equity in the departing residence to allow a rental income offset without documentation. I always review both the Texas equity position and the documentation available before structuring the loan.
Frequently Asked Questions
How does Fannie Mae calculate rental income for mortgage qualification in Texas?
I'm Bond Peter Njoku (NMLS #2670329) and Fannie Mae uses 75% of verified rental income toward your qualifying income — the remaining 25% is set aside for vacancies and landlord expenses. For existing rental properties you've owned for at least two years, I average your two years of Schedule E income from your federal tax returns, use the lower of that average or the current lease amount, and apply the 75% factor. So $2,000/month rental income × 75% = $1,500/month of qualifying income. For recently purchased properties or new leases, the rules are slightly different — call or text me at 469-545-7180 to walk through your specific situation.
What is Fannie Mae's new 45-day rental income rule from September 2026?
I'm Bond Peter Njoku (NMLS #2670329) and Fannie Mae published this rule in Announcement SEL-2026-08 on September 2, 2026, with mandatory implementation November 1, 2026. The rule says that if one of your rental properties was acquired within 45 days of your application date, you cannot use a signed lease to document the rental income. Instead, the lender establishes the income through a full appraisal, a licensed appraiser's rental evaluation, or a licensed property manager's documentation. This prevents inflated leases from being used as income on newly acquired properties. Call me at 469-545-7180 to make sure your rental documentation is in order before your application.
Can I count rental income from a duplex I'm buying to live in?
I'm Bond Peter Njoku (NMLS #2670329) and yes — this is called house hacking and it's one of my favorite strategies for DFW buyers. When you purchase a 2–4 unit property as your primary residence, Fannie Mae and FHA both allow you to count projected future rents from the other units toward your qualifying income, even if you have no rental history. For a duplex in Garland priced at $280,000 where the second unit rents for $1,350/month, you'd count $1,013/month of that toward qualifying — meaningfully reducing your effective housing cost. Call or text me at 469-545-7180 to see if this works for your situation.
What documents do I need to use rental income on a Texas mortgage application?
I'm Bond Peter Njoku (NMLS #2670329) and the documentation depends on the rental type. For existing properties with rental history: two years of federal tax returns with Schedule E plus current lease agreements. For a newly acquired property owned more than 45 days: a current signed lease OR an appraisal with market rent. For a multi-unit primary residence you're buying: the appraisal's rent schedule. For a property acquired within 45 days: a full appraisal including market rent (no lease accepted under the new Fannie Mae SEL-2026-08 rule). I gather all of this as part of my pre-approval process so there are no surprises at underwriting. Text me at 469-545-7180 to get started.
DFW Investor or Move-Up Buyer? Let's Run Your Rental Income Numbers
I'm Bond Peter Njoku (NMLS #2670329). Whether you're a Texas investor qualifying with rental income, a move-up buyer keeping your starter home, or a first-time buyer considering a duplex house hack in DFW, I run detailed income calculations before your pre-approval so you know exactly what you qualify for. Call or text me at 469-545-7180, message me on WhatsApp, or start your pre-approval online.