Whether you're planning to rent out your current home or sell it around the same time as closing, FHA has specific rules for how your departing residence affects qualifying. Here's exactly what's required.
To count rental income from your departing home, you need ≥75% equity (≤75% LTV) per appraisal or AVM.
A fully executed 1-year lease, plus proof of the deposit landing in your account.
If under contract to sell at or before your new closing, the old payment is fully excluded from DTI.
Rent it out (with equity + lease) or sell it (with a signed contract) — different documentation for each.
Buying in a new town before your current home sells — common with job relocations across the Capital Region.
Keeping the old house as an investment while you move up or move on.
Your current home is already under contract, closing near the same time as your new purchase.
These are the FHA (HUD 4000.1) rules I underwrite to. Conventional, VA, USDA, and SONYMA treat some of these situations differently — I'll confirm which program fits when we talk.
| Scenario | Requirement |
|---|---|
| Renting out departing residence | Appraisal (Form 1004/1007) or AVM showing ≥75% equity (≤75% LTV) to count rental income against the old payment |
| Lease documentation | Fully executed 1-year lease agreement required |
| Deposit proof | Security deposit or first month's rent shown deposited into your account |
| Selling departing residence | Fully executed sales contract — old mortgage payment fully excluded from DTI |
| Final documentation | Signed Closing Disclosure (CD) from the sale, once available |
Non-QM investors (like the portfolio programs I use for bank-statement and asset-based files) size this differently. Since Non-QM isn't standardized by Fannie, Freddie, or FHA, guidelines vary by investor — here's the general shape.
| Requirement | Typical Non-QM rule |
|---|---|
| Default DTI treatment | Full PITIA of both properties counted in DTI unless the rental-income exception applies |
| Rental income exception | Signed lease + proof of security deposit/first month's rent received |
| Equity requirement | 25–30% equity in the departing residence (AVM or appraisal) — stricter than FHA's 75% LTV test |
| Reserves | 2–6 months PITIA on each property |
VA doesn't impose a strict equity test on rental offset like FHA does — but recommends reserves.
| Scenario | VA rule |
|---|---|
| Not closing before new loan | Full PITIA of the departing home counted in DTI |
| Rental income offset | 1-year lease + proof of deposit received — no strict equity/LTV overlay, but 3 months PITIA reserves on both properties is highly recommended |
| Pending sale offset | Payment can be excluded if contingencies are cleared and the buyer has a firm loan commitment |
Conventional keeps this simple — qualify with both payments, or use partial rental income to offset.
| Scenario | Conventional rule |
|---|---|
| Qualifying with both payments | Both mortgages counted in DTI; you need cash for the down payment without relying on sale proceeds |
| Renting it out | 75% of gross monthly rent offsets the current payment, with a signed lease and proof the security deposit was collected |
USDA is stricter about holding two financed properties at once than the other programs.
| Scenario | USDA rule |
|---|---|
| Two USDA-financed homes | Generally not allowed unless you can show a valid reason — job relocation or a significant change in family size |
| Rental income offset | Only usable if the departing residence has ≤75% LTV, backed by a current appraisal or AVM |
SONYMA's first-time-buyer requirement generally rules this out — with two narrow exceptions.
| Scenario | SONYMA rule |
|---|---|
| Owning a home while buying with SONYMA | Generally not allowed — SONYMA requires no ownership interest in a primary residence within the past 3 years |
| Exceptions | Waived for qualifying military veterans or purchases in a SONYMA-designated Targeted Area — even then, you must occupy the new home within 60 days |
Jumbo investors add liquidity checks on top of the standard rules — and NAF Cash has its own equity threshold.
| Scenario | Jumbo rule |
|---|---|
| Selling the departing residence | Final executed Closing Disclosure required to exclude the old PITIA from DTI |
| Retaining the departing residence | Qualify with full PITIA of both properties; must verify sufficient liquid assets for the new down payment, closing costs, and reserves |
| NAF Cash® Jumbo | Departing home must be listed for sale within 7 days of the NAF Cash purchase, with 40% net equity verified (30-35% in select major metros) |
Land loans don't allow the rental-income offset other programs use — the full old payment counts.
| Scenario | Land Loan rule |
|---|---|
| Retaining current residence | Full PITIA of the vacating primary residence is added directly to your DTI — no rental-income offset available |
| Required evidence | Current mortgage statement for the departing home, or paid tax receipts + insurance declarations if owned free and clear |
Licensed across New York State — with deep roots in the Capital Region and select NYC neighborhoods.
Don't see your town? Reach out — I lend statewide. Or see every Capital Region town.