Renting Out Your Utah Home Instead of Selling It
Program and regulatory figures verified September 25, 2026. Details change; confirm your scenario with us.
Two paper trails run in parallel here and they do not overlap. One keeps your property tax exemption. The other documents your rental income. Set both up at once.
Why this route is different in Utah
In most states, keeping the old house is what you do when the debt-to-income ratio will not stretch. Utah adds a tax reason to prefer it.
Utah Code 59-2-103(6)(a) limits the residential exemption to one primary residence per household, so a vacant departing home loses its 45% reduction. Subsection (6)(b)(ii) preserves the exemption for each residential property that is the primary residence of a tenant. Put someone in the house who lives there and the reduction stays attached to it. Reasoning in full on the tenant exception page.
The lease will not help your loan
Fannie Mae Selling Guide B3-3.8-05 is dated 09/02/2026 and arrived with Announcement SEL-2026-08. Its documentation section ends with a flat statement: lease agreements are not permitted for any departing residence.
That is a change from how this used to work and a lot of what is written about departing residences still assumes a signed lease is the strongest document you can bring. For a departing residence it is now the one document that does not count. Acceptable evidence of monthly gross rent is:
- 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 such as Zillow, Redfin or the MLS, using at least three comparable rental properties, from the same market area including subdivision or project where possible.
The lender must also document a current housing payment before any of that rental income is usable, and must keep all documentation used to determine market rents in the loan file.
What the income is actually worth
Adjusted net rental income is monthly gross rent multiplied by 75%, then minus the departing residence's PITIA.
If the answer is positive, it offsets the departing residence's PITIA and stops there. It does not become income you can use to buy a larger house. If the answer is negative, the shortfall is added to your debt-to-income ratio. So the realistic best case is that the old house stops counting against you.
This is where the preserved exemption earns its keep. PITIA includes taxes. Keeping the 45% reduction lowers the tax line, which lowers the PITIA, which makes a positive result more likely on the same rent.
Reserves, and the 12-month experience line
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. That six months is in addition to reserves required for multiple financed properties.
First-time landlords are the ones this catches, which is most people making a move-up. Lower taxes on the departing home shrink this number too, since reserves are measured against the payment.
If the departing home has more than one unit
For a multi-unit departing residence the lender obtains the most recent year of individual federal income tax returns, IRS Form 1040, to support rental income received for tenant-occupied units. Rental income for tenant-occupied units follows the non-subject-property guidance, and the vacancy factor applies only to the unit the borrower occupied.
A workable sequence
| Order | Step | Why here |
|---|---|---|
| 1 | Ask your county assessor what they need to treat the home as a tenant's primary residence | The exemption is county-administered under 59-2-103.5 |
| 2 | Order a Form 1007 or confirm the appraisal will include market rents | The loan file needs this and the lease cannot substitute |
| 3 | Price the PITIA with the exemption preserved | It drives both the offset and the reserve figure |
| 4 | Verify six months of reserves if this is your first rental | Under 12 months of management experience |
Compare this against the other two routes on the structures page, or start from the Utah guide. Rent documentation mechanics are on the Form 1007 page.
Frequently asked questions
Can I use a signed lease to document rent on the Utah home I am leaving?
No. Fannie Mae Selling Guide B3-3.8-05, dated 09/02/2026, states that lease agreements are not permitted for any departing residence. Use a complete appraisal that includes market rents, a Form 1007 rent schedule for the occupied unit, or market analysis tools with at least three comparable rentals from the same market area.
How is rental income from a departing residence calculated?
Multiply monthly gross rent by 75% for net rental income, then subtract the departing residence's PITIA. A positive result may offset that property's PITIA only. A negative result must be included in the debt-to-income ratio. Fannie Mae B3-3.8-05.
Can departing-residence rental income increase what I qualify for?
No. B3-3.8-05 limits a positive adjusted net rental income to offsetting the departing residence's PITIA. It never adds qualifying income, so the best outcome is that the old house stops counting against your ratio.
How many months of reserves will a first-time landlord need in Utah?
Six months of reserves covering the vacated property's PITIA, because that requirement applies when the borrower has less than 12 months of property management experience. It is in addition to any reserves required for multiple financed properties.
Does renting my Utah home out keep its property tax exemption?
Yes, where the home becomes the primary residence of a tenant. Utah Code 59-2-103(6)(b)(ii) allows an owner of multiple primary residences the residential exemption for each residential property that is a tenant's primary residence. The exemption is administered by your county under 59-2-103.5, so confirm the documentation with your assessor.
What if the departing Utah home is a duplex?
For a multi-unit departing residence 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 units. The vacancy factor is applied only to the unit the borrower occupied, and tenant-occupied units follow the non-subject-property rental income guidance.
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.