Rental income can help you qualify for an investment property mortgage, including income expected from the property you are buying.
But lenders generally cannot count the full advertised rent or simply accept your estimate of what the property will earn.
For a conventional Fannie Mae loan, the lender documents eligible rent, applies the required calculation and compares the result with the property's monthly housing expense.
Your rental-property management history also affects how positive rental income can be used.
Investment Property Rental Income Basics
| Question |
Fannie Mae Treatment |
| Can rental income from the property you are buying count? |
Yes, for eligible 1- to 4-unit investment properties |
| How much gross rent is generally used? |
75% for a standard long-term rental calculation |
| Why is only 75% used? |
The remaining 25% accounts for vacancy and ongoing maintenance expenses |
| What if you have at least 12 months of rental-property management experience? |
Positive adjusted net rental income can generally be used in full for qualifying |
| What if you have less than 12 months of rental-property management experience? |
Positive rental income can generally offset the property's PITIA, but cannot create additional qualifying income |
| What if the calculation produces a loss? |
The negative amount is included in the borrower's DTI |
Fannie Mae updated and reorganized its rental-income policies in September 2026.
Current Fannie Mae policy allows rental income from an eligible 1- to 4-unit investment property to be considered in mortgage qualification.
How the 75% Rental Income Rule Works
For a conventional investment-property purchase, Fannie Mae generally begins by multiplying documented gross monthly rent by 75%.
The remaining 25% accounts for vacancy and maintenance expenses.
The lender then subtracts the property's PITIA from that net rental amount.
PITIA generally includes principal, interest, property taxes, homeowners insurance and applicable association dues.
The formula looks like this:
Gross monthly rent × 75% = net rental income
Net rental income − PITIA = adjusted net rental income
Fannie Mae refers to the result as adjusted net rental income, or ANRI.
Rental Income Example
Suppose an investment property has documented monthly rent of $2,200.
Applying the 75% calculation leaves $1,650 in net rental income.
If the property's PITIA is $1,900, the calculation is:
$2,200 × 75% = $1,650
$1,650 − $1,900 = -$250
The property produces a $250 monthly rental loss for qualifying purposes.
That $250 is included in the borrower's debt-to-income calculation.
The mortgage calculation can therefore look different from the property's expected real-world cash flow. The 25% reduction is an underwriting adjustment rather than a prediction that every rental will lose exactly 25% of its gross income to vacancy and maintenance.
What Happens When the Property Produces Positive Rental Income?
Suppose the same property rents for $3,000 a month and has $1,900 in PITIA.
The calculation becomes:
$3,000 × 75% = $2,250
$2,250 − $1,900 = $350
The property now has $350 in positive adjusted net rental income.
Whether that $350 can increase your qualifying income depends on your rental-property management history.
Why 12 Months of Rental Experience Matters
Fannie Mae distinguishes between borrowers with at least 12 months of rental-property management experience and borrowers with less experience.
If you have at least 12 months of experience and the adjusted net rental income is positive, the full positive amount can generally be used in qualifying.
In the previous example, that means the $350 could be added to qualifying income.
If you have less than 12 months of rental-property management experience, positive rental income can generally be used only to offset the property's PITIA.
It cannot create additional qualifying income.
| Rental Experience |
Positive Rental Income |
Rental Loss |
| 12 months or more |
Full positive ANRI can generally be used in qualifying |
Loss is included in DTI |
| Less than 12 months |
Can generally offset PITIA only |
Loss is included in DTI |
This distinction can be significant for someone buying their first rental.
The property may generate enough rent to cover its qualifying payment without providing additional income that can be used to support other debts.
What Documents Prove Rental Income?
The lender needs documentation that supports the rent used in the calculation.
For a purchase, Fannie Mae generally requires a Single-Family Comparable Rent Schedule, Form 1007, for a 1-unit investment property or a Small Residential Income Property Appraisal Report, Form 1025, for a 2- to 4-unit property.
If an existing lease will transfer to the buyer, the lender also obtains the fully executed lease.
The lease amount must be supported by the applicable appraisal rent schedule.
If current market rents do not reasonably support the rent shown on the lease, the lender may need additional documentation, a written analysis or the lower supported amount.
Fannie Mae's rental-income requirements also limit when a lease can be used by itself to determine qualifying rent.
Can You Use a Lease to Qualify?
A lease can be part of the documentation, but it does not automatically determine how much rent the lender can use.
For a property you are purchasing, an existing lease that transfers with the property must be supported by Form 1007 or Form 1025.
Fannie Mae also allows leases in certain other circumstances, such as when a property was placed in service during the current year or was purchased after the borrower's most recent tax return was filed.
A newly executed lease generally must have a term of at least six months when the property is not reported on the borrower's tax return and the lease is being used under Fannie Mae's qualifying rules.
What If You Already Own the Rental Property?
Rental income from a property you already own is often documented through Schedule E of your federal income tax return.
The calculation is different from simply taking 75% of the monthly lease amount.
Fannie Mae generally analyzes the income and expenses reported on Schedule E and can add back certain expenses, such as depreciation, mortgage interest, taxes, insurance and homeowners association dues, when calculating rental cash flow.
The result is then compared with the property's qualifying housing expense when required.
If a recently acquired property does not yet appear on Schedule E, other documentation can be used under Fannie Mae's rules.
Recently Purchased Rental Properties Have Additional Rules
A separate rule can apply when you purchased another investment property within 45 days of applying for the new mortgage.
For those properties, Fannie Mae does not allow a lease agreement to establish the qualifying rent.
Instead, the lender generally uses market-rent documentation such as an appraisal with market rents, Form 1007 or other permitted market analysis for a multi-unit property.
The lender then multiplies the gross rent by 75% and subtracts the property's PITIA.
If the result is positive, that income can be used only to offset the PITIA. A negative amount must be included in DTI.
Fannie Mae added the current 45-day policy as part of its September 2026 rental-income update.
Rental Income Can Change Your DTI
Rental income can either help or hurt your debt-to-income ratio.
If the property produces eligible positive income, that amount can help qualification when Fannie Mae rules allow it to be used.
If the calculation produces a loss, the loss becomes part of your monthly obligations.
For example, a $400 monthly rental loss increases the debts used in the DTI calculation by $400.
This interaction is one reason conventional investment property underwriting considers both the property's finances and the borrower's personal income and debts.
Rental Income Does Not Replace Reserve Requirements
A property can produce positive qualifying rental income and still require substantial cash reserves.
The two requirements measure different things.
Rental income affects the income and debt side of mortgage qualification.
Reserves show that you have eligible assets remaining after closing.
For a Fannie Mae investment-property transaction through Desktop Underwriter, the subject property generally requires six months of reserves, with additional requirements possible when you own other financed properties.
Those reserve requirements can grow as your rental portfolio grows, even when all of the properties produce income.
Can You Use Short-Term Rental Income?
Yes, under current Fannie Mae rules, but short-term rental income is calculated differently.
Fannie Mae's September 2026 policy allows qualifying short-term rental income from an eligible 1-unit investment property.
The property must be legally permitted to operate as a short-term rental under applicable local registration and licensing requirements.
For a purchase, the lender can use a Form 1007 based on standard long-term rentals or validated short-term rental data from MLS or property management companies.
When short-term rental data is used, Fannie Mae requires three comparable short-term rental properties and information about their rental rates and days rented.
The calculation is also more conservative than the standard long-term rental calculation.
The lender multiplies qualifying gross short-term rent by 50%, rather than 75%, and then subtracts PITIA.
The remaining 50% accounts for vacancy and maintenance expenses.
Positive adjusted net rental income from a short-term rental can be used only to offset PITIA. It cannot create additional qualifying income under this policy.
Fannie Mae's short-term rental rules took their current form in the September 2026 update.
Conventional vs. DSCR Rental Income
A conventional loan and a DSCR loan can look at the same property's rent in very different ways.
Conventional financing considers rental income within the borrower's broader income, debt, credit and asset profile.
A DSCR loan generally centers qualification more directly on the relationship between property income and the property's debt obligation.
That can make the distinction especially relevant for investors whose personal income does not fit conventional underwriting.
The difference between conventional and DSCR financing becomes less about whether rent exists and more about how heavily the loan relies on that rent.
Can Rental Income Help You Buy Your First Investment Property?
Yes.
You do not necessarily need a history of owning rental properties before any income from the new property can be considered.
But having less than 12 months of rental-property management experience limits how positive income can be used under current Fannie Mae rules.
For a first-time investor, the eligible rent can offset the property's PITIA.
If the rental calculation produces more income than the property payment, the excess generally cannot be added to qualifying income until the borrower meets the required rental-management history.
You still need to meet the other credit, down payment, asset and underwriting requirements for the mortgage.
What If the Property Is a Second Home?
Rental income rules depend on how the property is actually occupied.
A second home and an investment property are separate occupancy classifications.
A property primarily purchased to generate rental income should not be classified as a second home simply because the borrower also expects to use it personally.
That distinction affects underwriting, pricing and how income from the property is treated.
A property that legitimately qualifies as a second home can have different rules for rental income from a second home than a non-owner-occupied investment property.
Bottom Line
Rental income can help you qualify for an investment property mortgage, including income from the property you are buying.
For a standard Fannie Mae long-term rental, the lender generally starts with 75% of documented gross rent and subtracts the property's PITIA.
A borrower with at least 12 months of rental-property management experience can generally use positive adjusted net rental income in full.
With less than 12 months of experience, positive rental income can generally offset the property's payment but cannot create additional qualifying income.
Short-term rentals follow a different calculation under Fannie Mae's current rules, including a 50% adjustment to qualifying gross rental income.
FAQ
Can You Use Projected Rental Income to Qualify for an Investment Property?
Yes. Fannie Mae permits eligible rental income from a 1- to 4-unit investment property you are purchasing.
The lender must document the rent using the required appraisal rent schedule and other applicable documentation rather than relying solely on the borrower's projection.
Why Do Lenders Only Use 75% of Rental Income?
Fannie Mae generally uses 75% of gross monthly rent for standard rental-income calculations to account for vacancy and ongoing maintenance expenses.
The 25% reduction is an underwriting calculation. It does not mean every rental property will actually have expenses equal to 25% of its rent.
Can You Use Rental Income if You Have Never Been a Landlord?
Yes, but current Fannie Mae rules limit how positive rental income can be used when you have less than 12 months of rental-property management experience.
The income can generally offset the property's PITIA, but any amount remaining after that offset cannot be added to your qualifying income.
What Happens if Rental Income Does Not Cover the Mortgage Payment?
If the qualifying rental-income calculation produces a negative adjusted net rental income amount, the loss is included in your DTI.
For example, if 75% of qualifying rent is $250 less than PITIA, the lender generally treats that $250 as an additional monthly obligation.
Can Short-Term Rental Income Be Used for a Conventional Loan?
Yes, for an eligible 1-unit Fannie Mae investment property that can legally operate as a short-term rental.
Current Fannie Mae rules use 50% of qualifying gross short-term rental income before subtracting PITIA, and positive income can be used only to offset the property's payment.
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