Fannie Mae issued Selling Guide Announcement SEL-2026-08 (Announcement), setting forth updates to the Selling Guide. Per the Announcement, Fannie Mae:

• Revised rental income policy to simplify its overall structure, improve clarity, address policy gaps, and better align policy with real-world execution. Key policy updates include:
  • New requirements for the use of short-term rental income, including alternative documentation options and conservative qualifying income treatment; 
  • Standardized requirements for investment properties purchased within 45 days of the subject property to improve consistency in rental income determination; 
  • A new framework for departing residences that relies on market-supported rents, reserve requirements, and Principal, Interest, Taxes, Insurance, and Assessments (PITIA) offset limitations rather than lease agreements; and 
  • Strengthened lease agreement standards through minimum lease term requirements, enhanced validation requirements, and restrictions on non-arm’s-length lease arrangements.
• Updated policy related to the highest and best use requirements for appraisal reports completed using Uniform Appraisal Dataset (UAD) 3.6 by updating policy to:
  • 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 1- to 4-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 1- to 4-unit residential properties when the present use does not satisfy one or more of the highest and best use tests.
• Expanded Native American Conventional Lending Initiative (NACLI) eligibility by extending program eligibility to federally recognized tribes that are either approved to participate in HUD’s Section 184 program or have entered into a Memorandum of Understanding with Fannie Mae and allowing lenders to sell NACLI loans to Fannie Mae without obtaining special approval; and
• Clarified eligible transactions and leverage of use of Fannie Mae’s NACLI documents.

Revisions related to rental income policy are effective for all loans with application dates on and after November 1, 2026 (lenders, however, are encouraged to implement these changes immediately). Revision related to highest and best use requirements for Uniform Appraisal Dataset (UAD) 3.6 are effective September 2, 2026 for appraisal reports completed using UAD 3.6. Revisions related to NACLI allows lenders to take advantage of this policy change September 2, 2026.

Click to view the Fannie Mae Selling Guide Announcement SEL-2026-08: https://www.tenaco.com/wp-content/uploads/2026/09/Fannie-Mae-Selling-Guide-Announcement-SEL-2026-08-09-02-26.pdf