Announcement 2026-071 Fannie Mae Selling Guide SEL 2026-08

Fannie Mae Selling Guide SEL 2026-08

Newrez LLC "Newrez" Approved Correspondent Clients, Fannie Mae published SEL 2026-08 on September 2, 2026, announcing updates and clarifications to the Rental Income Policy. These updates are effective immediately.

Key Highlights:

•     In order to use rental “income”, the applicant must have 12 months of property management experience and the experience must be documented

•     If less than 12 months or no experience, only the payment can be offset

•     Unable to use a lease agreement under the following scenarios:

o   Departing residence is being converted to an investment property

o   Investment property was purchased within 45 days of the subject property

•     Provides clear guidance on when a lease is permitted and the requirements surrounding utilizing a lease

•     Calculators are available and the Income Calculator will support calculating rental income

•     ADU income is only allowed from One ADU

•     ADU income is not permitted on cash-out transactions

•     ADU income can’t be more than 30% of the qualifying income

•     Short-term rentals must be legally permitted and in compliance with all local registration and licensing requirements

•     Short-term rental has a 50% reduction for vacancy losses and maintenance expenses.

•     Six months reserves required when converting the departing residence to an investment when the applicant doesn’t have the 12/mo. property management experience.

For complete details, refer to Section B3-3.8 – Rental Income in the Fannie Mae Selling Guide.

UAD 3.6 – Highest and Best Use Requirements

These changes are effective immediately and only apply to UAD 3.6 appraisal assignments to support new URAR reporting requirements.  These updates do not apply to legacy appraisal report forms.

The policy was updated to include:

•             require the property’s highest and best use, as improved or as proposed, to be a residential use, rather than requiring it to be the property’s present use;

•             define present use, residential use, and subordinate use in the context of highest and best use;

•             require the property to be a primarily residential one- to four-unit property, with any non-residential use subordinate to the residential use, replacing the previous “residential in nature” guidance; and

•             establish the eligibility criteria and reporting requirements for one- to four-unit residential properties when the present use does not satisfy one or more of the highest and best use tests.

Expansion of Native American Conventional Lending Initiative (NACLI) – Newrez will not be adopting this policy expansion at this time.