Updated November 2026. Fannie Mae’s rental income rules (updated September 2, 2026) and IRS rules were read on October 22, 2026.
To buy a second home and rent the first, you qualify for both mortgages, buy the new home and turn the old one into a rental. Since Fannie Mae’s September 2, 2026 update, a lender counts 75% of the first home’s market rent, not a signed lease, against that home’s payment. As of November 2026, the 2-of-5-year tax rule still matters if you sell the first home later.
Jump to: 🪜 Steps · 🏠 Two mortgages · 💲 Using equity · 🤝 Landlord basics · 📍 Taxes · ❓ FAQ
Key takeaways
- Fannie Mae counts 75% of market rent for a home you’re moving out of, minus its full payment. Leases no longer count for that home.
- With under 12 months of landlord experience, you need six months of reserves to cover the old home’s payment.
- A HELOC on your first home can fund the down payment, but that home secures the loan and the rate usually floats.
- To keep the home sale tax break, you need 2 of the last 5 years living there. Rent it out longer than about 3 years and you lose it.
Keeping your first home as a rental can build wealth. It can also stretch you thin. Here’s how the loan, the equity and the tax rules work, with real numbers, so you can decide before you shop.
How do you buy a second home without selling the first?
Here’s the order most owners follow. It works whether the new place is across town or across the state.
- Run the numbers on the first home as a rental: market rent, taxes, insurance, repairs and a month or two empty each year.
- Check your current mortgage and HOA for move-out or rental limits.
- Get pre-approved for the new loan, with both payments in your debt-to-income ratio.
- Decide how you’ll fund the down payment: savings, a HELOC, a home equity loan or a cash-out refinance.
- Buy the new home, then switch the old one to a landlord insurance policy.
- Sign a tenant, and track rent and costs for your tax return from day one.
One detail changes the whole loan. If you’ll live in the new home, it’s your principal residence, and the home you leave becomes the rental, so it loses its owner-occupied status. Fannie Mae’s occupancy rules treat a principal residence, a second home and an investment property differently. A “second home” in loan terms is a one-unit place you use part of the year, and it can’t be a rental. So the label you’d use in conversation isn’t always the one on your loan.
Can you get another mortgage if you already have one?
Yes. Lenders don’t cap you at one mortgage. They look at your debt-to-income ratio (DTI): all your monthly debts, including both house payments, divided by your gross monthly income. The question is whether the new payment plus the old one still fits.
Rent from the first home can help, but only part of it. Fannie Mae’s Selling Guide, section B3-3.8-05, sets the rule for a “departing residence,” the home you’re moving out of. The lender takes 75% of the market rent and subtracts that home’s full payment: principal, interest, taxes, insurance and HOA dues (PITIA).
A worked example
| Line | Monthly |
|---|---|
| Market rent for your first home | $2,200 |
| 75% counted by the lender | $1,650 |
| First home’s full payment (PITIA) | $1,800 |
| Result | -$150, added to your debts |
In this example, the rent doesn’t cover the old payment, so the $150 gap counts as debt. If the result were positive, it could only offset that home’s payment. It wouldn’t count as extra income. These are sample figures, not a quote.
What changed in September 2026
Under the updated guide, lease agreements are not accepted for any departing residence. The lender supports market rent with an appraisal that shows market rents, a rent survey form, or a market tool such as the MLS with at least three comparable rentals. With less than 12 months of property management experience, you also need six months of reserves to cover the old home’s payment.
Not every loan follows Fannie Mae, so ask your lender which rules apply. Then compare loan types with our guide to choosing the right loan type.
Can you use your home equity to buy a second home?
Yes. Many owners fund the down payment on the new place with equity from the first. Equity is what your home is worth minus what you still owe. There are three common ways to tap it.
| Option | How it pays out | Watch out for |
|---|---|---|
| HELOC | A credit line you draw from, often for about 10 years | Variable rate; payments jump when repayment starts |
| Home equity loan | One lump sum, fixed payments | A second payment on the first home |
| Cash-out refinance | A new, bigger first mortgage | You may give up a low rate |
The Consumer Financial Protection Bureau says a HELOC uses your home as collateral. Fall behind and you could lose it. The rate usually floats, and the lender can freeze the line if your home’s value drops a lot. Compare quotes from more than one lender. In Florida, you can also ask Beycome Mortgage about a home equity loan or HELOC.
Remember the new loan counts in your DTI too. Equity money for the down payment is still debt the lender will see. For other ways to fund it, see buying a second home with no money down. Short-term loans exist as well; our page on hard money loans explains why they cost more.
What does it take to rent out your first home?
Being a landlord is a job. Before you buy, check these four things.
- Your current mortgage. Many loans required you to live in the home for a set time, so read your note before you move out.
- Insurance. Switch to a landlord policy; a homeowner policy may not cover a rental.
- HOA and city rules. Some HOAs limit rentals, and some cities need a rental permit or inspection.
- Cash for repairs and gaps between tenants. A month without rent still means a month of payments.
Screen tenants well and use a written lease that follows your state’s law. Plan for damage, too. Our guide on property damage by tenants covers deposits and claims, and how to deal with squatters explains what to do if a vacant home is taken over.
Not sure renting makes sense? Our side-by-side on renting or buying runs the numbers from the tenant’s side.
How is a rented first home taxed?
While you rent it
Rent is taxable income. The IRS says in Publication 527 that you report it on Schedule E. You can deduct costs like mortgage interest, taxes, insurance and repairs. You also depreciate the building over 27.5 years. When you turn a home into a rental, your starting basis for depreciation is the lower of your adjusted basis or the home’s fair market value that day.
Sell smarter
List your home on the MLS from $99
A flat fee instead of a percentage, and $0 to Beycome at closing. You stay in control of your sale.
Sell your home →Buy smarter
Get up to 2% back at closing
On homes listed by other agents, Beycome credits you up to 2% of the price at closing (1% kept, $1,499 minimum; not on FSBO homes or homes listed by Beycome sellers).
Buy a home →When you sell it
The home sale exclusion lets you skip tax on up to $250,000 of gain, or $500,000 on a joint return. Per IRS Topic 701, you need to have owned and lived in the home for at least 24 months of the 5 years before the sale.
That creates a window. Move out and rent the home, and you can still qualify if you sell within about 3 years of moving out. Wait longer and you fail the use test. Either way, Publication 523 says you can’t exclude the part of the gain equal to depreciation after May 6, 1997. Talk to a tax pro before you set a sale date. Our guides on avoiding capital gains tax on a home sale and taxes when you sell your home go deeper.
Should you rent the first home or sell it?
Rent if the numbers work after vacancy and repairs, you have reserves, and you want to be a landlord. Sell if the rent won’t cover the payment, you need the equity, or the tax window is closing. Selling also frees your DTI for the new loan.
If you sell, a $99 flat fee MLS listing puts the home on the MLS with $0 at closing, so more of the equity goes to your next down payment.
On the buying side, the Beycome buyer program is open to every buyer on homes listed by other agents (the commission credit can’t apply where no buyer-agent commission is offered, like most FSBO homes, or on homes listed by Beycome sellers), second homes included. There’s no upfront fee. If the seller offers a buyer’s agent commission, Beycome keeps 1% of the price (minimum $1,499) and credits the rest to you at closing, with lender approval. On a $400,000 home with 3% offered, that’s $8,000 back.
That 3% is an example only: commissions are not set by law or NAR rules, they’re negotiable, the seller chooses whether to offer buyer-agent pay, and since August 17, 2024 those offers aren’t shown on the MLS.
For context, NAR’s median existing-home price was $417,500 in September 2026. Before you start, check your budget, credit and reserves.
Second home questions
Can I buy a second home and rent out my first?
Yes, if you qualify for both payments. The lender counts part of the expected rent from the first home, and you’ll need reserves if you’re new to renting.
Can I get another mortgage if I already have one?
Yes. Lenders check that both payments fit your debt-to-income ratio, along with your credit, down payment and reserves.
How much rental income counts toward a new mortgage?
Under Fannie Mae’s September 2026 rules, 75% of market rent, minus the old home’s full payment. A positive result only offsets that payment.
Can I use a home equity loan to buy a second home?
Yes. A home equity loan or HELOC can fund the down payment. Your first home secures it, and the new payment counts in your debt ratio.
Do I pay capital gains if I rent my old home and sell it later?
You can still exclude up to $250,000 ($500,000 joint) if you lived there 2 of the 5 years before the sale. Gain from depreciation is taxed.
How do I buy a second home without selling my first?
Qualify for both payments, fund the down payment from savings or equity, buy the new home, and rent the old one with landlord insurance and a written lease.
Is my new home a second home or a primary residence for the loan?
If you’ll live in it, it’s usually your principal residence, and the home you leave becomes a rental. A loan “second home” is a one-unit place used part of the year, not rented.
Does a lease help me qualify for the new loan?
Not on Fannie Mae loans since September 2026. Leases aren’t accepted for a departing residence; market rent is used instead.
Loan rules are from Fannie Mae’s Selling Guide, section B3-3.8-05, dated September 2, 2026; other loan programs and lenders set their own rules. Rent and payment figures are examples. Tax rules are from IRS Publications 523 and 527 and Topic 701; this is general information, not tax, legal or lending advice.
Beycome prices as of October 2026: Basic $99, $0 due to Beycome at closing (other closing costs, taxes and title fees still apply). The buyer credit is the buyer-agent commission offered minus 1% of the price (minimum $1,499), paid at closing with lender approval.
Sources
- Fannie Mae Selling Guide B3-3.8-05, departing residence rental income, dated September 2, 2026, read October 22, 2026.
- Fannie Mae Selling Guide, general rental income, read October 22, 2026.
- CFPB, what is a HELOC, read October 22, 2026.
- IRS Publication 527, residential rental property, read October 22, 2026.
- IRS Publication 523, selling your home, read October 22, 2026.
- IRS Topic 701, sale of your home, read October 22, 2026.
- NAR, existing-home sales for September 2026, released October 13, 2026.
- Beycome buyer program, October 2026.
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