Both Fannie Mae and Freddie Mac have made changes to a portion of the rental income qualifications. These new RENTAL INCOME CHANGES guidelines are required to take effect as of January 1, 2024 but lenders are encouraged to implement them as soon after October 4th, 2023 as they are willing.

FANNIE MAE

LANDLORD HISTORY (INVESTMENT PROPERTY

Previously landlord history was not required to use rental income that exceeded the PITIA.

The new guideline is when rental income is derived from the subject property or non-subject property the amount of rental income that can be used will require BOTH a primary housing expense (rent or mortgage) AND at least one year of property management experience.

LEASE AGREEMENTS

Old Guideline – Income received from a lease could be used as income (above the PITIA) regardless of the landlord history of the borrower. No evidence was required to ensure that the lease was in effect.

New Guideline – The biggest hit will be those who have a departing residence and need rental income above and beyond just offsetting the mortgage payment on the departing residence.

In order to use income above PITIA you must have form 1007 or 1025 to support the income on the lease agreement OREvidence the 2 months consecutive bank statements showing rent payments for existing lease or copies of security deposit and 1st month’s rent check with proof of deposit for new lease agreement.

FREDDIE MAC

NEWLY EXECUTED LEASES OR PROPERTIES WITH NO RENTAL HISTORY

Old Guideline – Lease must be for a minimum of one year.

New Guideline – Must have the first payment due no later than the 1st payment on the subject property mortgage.

Old Guideline – Evidence of receipt of two months of rental income was NOT required.

New Guideline – Obtain lease agreement AND form 1000 or 72 OR Proof of two months rents received OR 1st Months rent and security deposit.