Form 1007, and Why Your Lease No Longer Counts
Program and regulatory figures verified September 25, 2026. Details change; confirm your scenario with us.
If you have read anywhere that a signed lease is the strongest way to prove rent on the home you are leaving, that guidance is out of date. Here is the current rule.
What changed
Fannie Mae reorganised its rental income guidance and issued Announcement SEL-2026-08 on September 2, 2026. Departing residences now live in their own section, B3-3.8-05, dated 09/02/2026. Guidance that previously sat under B3-3.1-08 has moved, and a good deal of writing still cites the old section number.
The substantive change that matters most: leases are out. The documentation section of B3-3.8-05 closes with the sentence, lease agreements are not permitted for any departing residence.
What is accepted
To determine monthly gross rental income the lender may use:
- 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 or the MLS. When using these tools the lender must obtain at least three comparable rental properties, which should come from within the same market area including subdivision or project when possible.
Where the departing residence is a multi-unit property, the market analysis information is limited to the borrower-occupied unit. All documentation used to determine market rents must be in the loan file.
Separately, and this is a precondition rather than an option: the lender must document a current housing payment in order to use any rental income from the departing residence in qualifying.
The calculation, exactly
To determine adjusted net rental income the lender multiplies the monthly gross rent by 75%, then subtracts the PITIA for the departing residence.
- If the result is positive, the lender may use rental income to offset the departing residence PITIA only.
- If the result is negative, the lender must include the amount in the debt-to-income ratio.
The asymmetry is the point. A strong rent does not make you a stronger borrower for the new purchase; it makes the old house stop counting. A weak rent still hurts you.
Reserves
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. That six-month requirement is in addition to any reserves required for multiple financed properties.
Most people making a first move-up have no property management history, so plan on this rather than hoping to avoid it.
Multi-unit departing residences
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. Rental income for tenant-occupied units is calculated under the non-subject-property guidance, and the vacancy factor is applied only to the unit the borrower occupied.
The Utah wrinkle
Utah borrowers end up maintaining two separate records. Utah Code 59-2-103(6)(b)(ii) preserves the departing home's 45% residential exemption when it is the primary residence of a tenant, and the lease is what evidences that to the county. The same lease is the one document B3-3.8-05 will not accept for income.
Run both. The tenancy file for the assessor, the market rent file for the loan. Detail on the rental conversion page and the tenant exception page. Structures compared on the structures page.
Frequently asked questions
Can I use a lease to document rent on a departing residence?
No. Fannie Mae Selling Guide B3-3.8-05, dated 09/02/2026 under Announcement SEL-2026-08, states that lease agreements are not permitted for any departing residence. This is a change from earlier guidance, and many articles still describe the old approach.
What is Form 1007?
The Single-Family Comparable Rent Schedule. It is one of three accepted ways to establish monthly gross market rent on a departing residence, alongside a complete appraisal that includes market rents and market analysis tools using at least three comparable rental properties.
How many rental comparables are required if I use Zillow or the MLS?
At least three comparable rental properties, which should come from within the same market area, including the same subdivision or project where possible. All documentation used to determine market rents must be retained in the loan file.
How is adjusted net rental income calculated on a departing residence?
Monthly gross rent multiplied by 75%, then minus the PITIA for the departing residence. A positive result may offset that property's PITIA only and never adds qualifying income. A negative result must be included in the debt-to-income ratio.
Why do I need six months of reserves?
Because B3-3.8-05 requires the lender to verify six months of reserves covering the vacated property's PITIA when the borrower has less than 12 months of property management experience. It applies in addition to any reserves required for multiple financed properties.
Which Selling Guide section covers departing residences now?
B3-3.8-05, Rental Income from Non-Subject Property: Departing Residence, dated 09/02/2026. Rental income guidance was reorganised by Announcement SEL-2026-08, so citations to the older B3-3.1-08 section are out of date.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal, tax, or real estate advice. Utah's residential exemption is administered county by county under Utah Code 59-2-103.5, and eligibility depends on your facts; your county assessor, your CPA or a Utah attorney, and your real estate agent each handle their own part. Loans are subject to borrower and property qualification.