People say Annie Mae. The agency is Fannie Mae. The change that matters for a Johnson City, Kingsport, Bristol, or Jonesborough move-up is in Selling Guide announcement SEL-2026-08 and topic B3-3.8-05. If you are buying a new primary residence and keeping the house you live in now as a rental, Fannie Mae no longer uses a signed lease to count that departing home’s rent. Lenders must follow the new rental-income rules for applications dated on or after November 1, 2026. Many shops can use them sooner.

This is a conventional Fannie Mae rule, not a VA construction product and not a Preferred Rate exclusive. Tim Arrowood (NMLS #393468) at The Arrowood Team, Preferred Rate, partnered with American Pacific Mortgage (NMLS #1850), will tell you whether your Tri-Cities numbers actually take the old payment out of the new debt-to-income ratio. Educational only. Not a commitment to lend. Start at arrowoodteam.com.

Why this matters in the Tri-Cities more than a lease lecture

A lot of Tim’s book already used VA occupancy on the house they live in now: Mountain Home, ETSU medical, National Guard, and families who bought the first ranch with a VA purchase. VA occupancy is used up on that house. The next purchase is often conventional if they want to keep the first house. That is exactly the departing-residence conversation Fannie Mae just rewrote.

The old stall was “find a tenant first.” That is a hard ask when the kids are still in Science Hill or Dobyns-Bennett and the Gray or Jonesborough house is under contract. Fannie Mae now blocks a lease as the rent document on the house you still occupy. The lender documents market rent instead.

What actually changed

The updated departing-residence topic is dated September 2, 2026. For a primary that will be vacated and converted to a rental when the borrower buys a new primary, lease agreements are not permitted as the rent document. The lender documents market rent: a complete appraisal that includes market rents, Fannie Mae Form 1007 (Single-Family Comparable Rent Schedule) for the occupied unit, or market-analysis tools such as Zillow, Redfin, or MLS with at least three comparable rentals in the same market area when possible.

The same announcement tightened short-term rental income, investment properties purchased close to the subject closing, and lease standards when a lease is still allowed on a true investment property. Those are separate paths. This article is the keep-the-Johnson-City-house path.

Who this is for from Johnson City to Bristol

This is for a household that will live in the next house. You are not using this rule to buy a vacant rental as the subject property. You are using it so the payment on the house you are leaving does not crush the debt-to-income ratio on the house you are buying.

• A Johnson City or Gray family buying up in Jonesborough or Elizabethton and keeping the first ranch as a long-term rental.
• A Kingsport owner moving closer to Eastman work and holding the first house.
• A Bristol or Bluff City household that can carry two payments only if market rent is allowed to offset the old housing cost.
• Someone who already used VA occupancy on the current house and was told they had to sell first because “DTI will not work with two houses.”

Tim originates from Johnson City and works the Tri-Cities and nearby Southwest Virginia corridor every week. Confirm the property state. He will say when the keep-and-rent math does not work.

How Fannie Mae counts the rent without a lease

The lender must first document a current housing payment on the departing home. No current payment, no rental income in qualifying. Then the lender documents monthly market rent with one of the methods above. For a multi-unit departing property, market comps are limited to the unit you occupy, and tax returns are still required for units that already have tenants.

The 75 percent haircut

Adjusted monthly net rental income starts at 75 percent of the documented monthly gross rent. The other 25 percent is treated as vacancy and upkeep. That is Fannie Mae’s published method, not a Tim overlay. If a Johnson City ranch would rent for a number that looks comfortable on Zillow, qualifying rent is still three-quarters of that number before the old payment is subtracted.

Positive vs negative net rent

After the 75 percent step, the lender subtracts PITIA on the departing house (principal, interest, taxes, insurance, and association dues). If the result is positive, that rental income may offset the departing-house PITIA only. It does not become extra income you can spend on a larger new payment. If the result is negative, the shortfall goes into the debt-to-income ratio on the new loan. That is the honest answer to “can we exclude the departing residence from DTI?” Sometimes yes. Sometimes the old house still counts.

Reserves if you have not managed a rental

If you have less than 12 months of property-management experience, Fannie Mae requires six months of reserves covering PITIA on the vacated house. That reserve is in addition to reserves required for multiple financed properties. First-time landlords in Washington County and Sullivan County should expect that conversation early, not at clear-to-close.

Form 1007 vs listing-site comps

Form 1007 is an appraiser rent schedule. Listing-site or MLS comps need three comparables, preferably in the same subdivision. Tim will not pick the highest asking rent on a Facebook group in Johnson City and call it done. The application has to match what Fannie Mae will accept.

What you still have to bring

No lease does not mean no homework. Plan on the current mortgage statement and the full housing cost on the house you are leaving, HOA docs if the departing property has dues, a realistic rent set from appraisal, Form 1007, or three same-market comps, reserves if you have not managed a rental for a year, and the usual income, asset, and credit documentation on the new primary purchase. Also bring a plan for who manages the old house after you move. Fannie Mae is counting market rent, not a promise that a cousin will find someone.

If the departing house is a 2-4 unit and other units already rent, bring the most recent federal return that shows that rental income. The no-lease rule is about the unit you are vacating, not a free pass on units that already have tenants.

When this is the wrong path in the Tri-Cities

Say so before you write the next offer.

• The subject property is the rental. Buying an empty investment house is a different Fannie Mae rental-income topic, or a DSCR conversation. Do not mash the two together.
• You need VA, FHA, or USDA on the new house. This departing-residence update is Fannie Mae conventional. Those guides have their own rental and occupancy rules. Tim will map those instead of forcing conventional.
• You wanted a VA one-time-close construction loan on the next house. Construction-to-perm and one-time-close are a different underwrite. This article does not rewrite those guides.
• Market rent does not cover the old payment after the 75 percent haircut. Then the old house still counts against you. Keeping it can still be a life decision. It may not be a qualifying decision.
• You were counting on a below-market lease to a relative. Fannie Mae now blocks leases on departing residences. A sweetheart lease is not a workaround.
• You wanted short-term rental income to carry the old house. SEL-2026-08 added separate, more conservative short-term rental rules. This keep-and-rent path is market rent for a standard rental conversion, not an Airbnb shortcut in Boone Lake or downtown Johnson City.

What to do before November 1, and after

Fannie Mae encourages lenders to use the new rental-income structure now. They require it for all loans with application dates on and after November 1, 2026. If you are shopping in Johnson City or Kingsport this fall, ask which rule set the loan application will use. If you are targeting a winter or spring 2027 close, assume the November rule is the one that matters.

Before you list the current house “just in case,” sit with the keep-and-rent numbers. Some Tri-Cities households sell because they think they have to. Some keep a house they cannot actually qualify with. Both mistakes are expensive when inventory is thin.

Bring Tim the address of the house you would keep, the current payment, and the address you want to buy. He will run the 75 percent / PITIA / reserve check against Fannie Mae B3-3.8-05, then tell you if conventional keep-and-rent, a sale, or a different program is the honest path.

Questions people ask

Do I need a signed lease to keep my current Johnson City home and buy another?

Not for Fannie Mae departing-residence rental income. Lease agreements are not permitted on that topic. The lender documents market rent. You still need a current housing payment on the old house and a full conventional application on the new one.

I already used VA on this house. Does that kill keep-and-rent?

It means the next purchase is often conventional, which is exactly where this Fannie Mae topic lives. Tim will still check whether a second VA occupancy is even on the table. Do not assume it is.

Can I use the extra rent as income toward a bigger new payment?

No. If net rental income is positive after the 75 percent step and PITIA, it may offset the departing-house payment only. It does not raise the income used for the new primary.

When should I call?

Before you write the next offer, or before you list the current house because someone said you need a tenant first. Tim Arrowood, The Arrowood Team, Preferred Rate, NMLS #393468. arrowoodteam.com. This is education, not a commitment to lend or a guarantee of approval.