Departing-residence rental offset · Conventional loans
Keep your current home, rent it out, and still qualify for the new one?
See whether 75% of the projected rent offsets enough of your old mortgage payment to bring your debt-to-income ratio under the line — the move-up math a generic DTI calculator never shows you. An estimate to bring to a lender, not a pre-approval.
Your numbers
Updates as you typeA typical range, not a guarantee — your real cap comes from the lender's automated-underwriting decision.
Estimates only. Bring your numbers to a licensed loan officer.
This is an educational estimate, not a mortgage approval or lending advice. The 75% factor, the net-rent-vs-PITIA treatment, and the PITIA definition follow the conventional departing-residence rule in the current Fannie Mae Selling Guide B3-3.8-01; the back-end ceiling shown is a typical range, not a guarantee. Real limits depend on the automated-underwriting (DU/LPA) decision and lender overlays. Confirm the current Selling Guide and your specific AUS findings with a licensed loan officer.
The maneuver
Keeping your home and buying the next one
You want to move up — more space, a different school zone, a new city — but you don't want to give up the low rate locked into your current mortgage, and selling first means a contingency, a rushed timeline, or a rent-back. So you plan to keep the current home and rent it out.
The obstacle is debt-to-income. Until something changes, the full payment on your current home — Principal, Interest, Taxes, Insurance, and Association dues, together PITIA — is still a liability on your file. Stack the new home's payment on top and the combined total usually blows past the lender's back-end ceiling. That's the wall move-up buyers hit, and it's why a loan officer might tell you to "sell first."
Conventional underwriting has an escape hatch built for exactly this: when you convert a departing residence to a rental, the lender can count part of the projected rent as offsetting the old payment. Get enough offset and the old mortgage stops dragging your DTI over the line.
One term to get right: this is a departing residence being converted to a rental (an investment property) — not a "second home." A true second home is owner-occupied and can't use rental income to qualify at all. Different classification, different rules. This tool models the departing-residence conversion only.
How the offset is calculated
The 75% factor, step by step
Take 75% of the projected gross rent
The lender multiplies your projected gross monthly rent by 0.75. The other 25% is a standard allowance for vacancy and maintenance — the rent you collect is never assumed to be the rent you keep.
Net it against the full old payment
Subtract the entire existing PITIA — including HOA dues — from that 75% figure. This is the step DIY calculators miss: the offset nets against the payment, it doesn't make the payment disappear.
Add a surplus to income — or a shortfall to debt
If 75% of the rent is more than the old PITIA, the surplus is added to your qualifying income. If it's less, the shortfall is added to your monthly debts. Either way, the old PITIA itself is no longer counted separately.
Re-run your DTI against the ceiling
With the offset applied, your back-end ratio is recalculated. If it lands under the lender's ceiling, the rent has done its job — you may qualify carrying both homes.
Offset is not removal
It's worth repeating, because a lot of blog posts get it wrong: applying 75% of the rent does not erase the old mortgage from your file. It nets against it. If the rent covers the payment, the net effect is roughly zero (or a small income bump). If the rent falls short, the gap counts against you as additional debt. The departing payment only truly "drops off" when 75% of the rent fully covers it.
Front-end and back-end DTI, and the ceiling
Two ratios matter. The front-end (housing) ratio is your new home's payment divided by income. The back-end ratio adds all your other monthly debts. For conventional loans the decision hinges on the back-end ratio, and the cap isn't a single fixed number — it's whatever the automated-underwriting system (Fannie's DU or Freddie's LPA) returns for your full file, often landing somewhere around 45–50%, sometimes adjusted by individual lender overlays. Treat the ceiling in this tool as a typical range to plan against, then confirm the real number with your loan officer's AUS findings.
Documentation matters. To count projected rent on a converted primary residence, lenders generally need a fully executed lease, often supported by the appraiser's rent schedule (Form 1007 for a one-unit home). A rent number you hope to get isn't the same as rent the file can use — line up the lease before you lean on these results.
What about reserves?
Separately from DTI, conventional guidelines typically require reserves — a number of months of PITIA held in savings, often on each property — and the exact month-count depends on your automated-underwriting result, credit, and loan-to-value. This calculator deliberately doesn't put a dollar figure on reserves; it's a real requirement to budget for, and one worth confirming against the current Selling Guide (B3-4.1-01, Minimum Reserve Requirements) and with your lender.
Keep vs. sell is a separate question
Qualifying isn't the same as should you. Keeping the home means becoming a landlord and forgoing the capital you'd free up by selling (and possibly a capital-gains exclusion if you've lived there long enough). That's a different analysis than this one — worth running on its own before you commit.
Who this is for
Built for the move-up decision
| If you are… | This tool answers… |
|---|---|
| A move-up buyer | Whether you can keep the low-rate home as a rental instead of selling, and still qualify for the next one. |
| Told "you have to sell first" | Whether the rent offset changes that answer — some officers quote an old equity rule or skip the offset entirely. |
| Running numbers pre-lender | Roughly how both payments land on your DTI before you ever pick up the phone. |
| A landlord-by-accident | Whether the rent math even works for qualifying, before you commit to keeping the place. |
Common questions
Frequently asked
Often yes. Under conventional (Fannie/Freddie-style) guidelines you can keep your current home, rent it out, and use 75% of the projected gross rent to offset the old mortgage payment when qualifying for a new primary mortgage. Whether you actually qualify depends on how much of that old payment the 75% covers, and where it leaves your back-end debt-to-income ratio.
The lender multiplies the projected gross monthly rent by 75%. The remaining 25% is a standard vacancy-and-maintenance allowance. That 75% figure is netted against the full existing payment (PITIA) on the departing home. A positive result is added to your qualifying income; a negative result is added to your monthly debts.
Enough that 75% of it — netted against your old PITIA and combined with your new payment and other debts — keeps your back-end DTI under your lender's ceiling, commonly in the 45–50% range but ultimately set by the automated-underwriting decision. The calculator back-solves that rent figure for you in the result above.
Not necessarily. The departing-residence rental offset exists precisely so move-up buyers don't have to sell first. If 75% of the projected rent covers enough of the old payment to keep your DTI under the ceiling, you may qualify carrying both homes — without a sale contingency. If you're told otherwise, it's worth asking whether the offset was applied.
It can. Counting 75% of the rent against the old payment removes most or all of that payment from your debt-to-income math, and any surplus can be added to income. But if the rent falls short of the old payment, the shortfall is added to your debts — so it lowers DTI only when the rent covers enough of the payment.
No — and the distinction matters. A true second home in agency terms is owner-occupied and cannot use rental income to qualify. Renting out your departing home makes it a converted primary residence / investment property, a different occupancy classification with its own rules. This calculator models the departing-residence conversion, not a second home.
Figures shown are estimates for planning and education. They are not a pre-approval, a rate quote, or lending advice, and they model the mainstream conventional (Fannie/Freddie-style) departing-residence offset only — FHA, VA, USDA, jumbo, and non-QM programs apply different rental and occupancy rules. Underwriting guidelines change; verify the current Fannie Mae Selling Guide and confirm your specific situation with a licensed loan officer and your automated-underwriting findings before relying on these numbers.