Why this playbook exists

Fannie Mae is rolling out several of the most consequential conventional-lending changes in years during 2026 and early 2027. This is a field guide for loan officers, real estate professionals, processors and anyone structuring Fannie Mae conventional transactions: what changed, when it becomes mandatory, and what to ask before a file gets deep into underwriting.

Three rules before you use any policy summary: always check the current Selling Guide and the DU findings on the actual case; remember that investor and lender overlays can be more restrictive than Fannie Mae minimums; and pay attention to dates, because some changes are already effective while others become mandatory later.

Key effective dates

  • Now: expanded condo Waiver of Project Review for eligible projects of 10 units or fewer, retirement of the 50% investor-concentration limit in established projects under Full Review, and several insurance updates.
  • Aug. 3, 2026: Limited Review retired for applications on or after this date; enhanced reserve-study requirements became mandatory.
  • Nov. 1, 2026: the new rental-income framework becomes mandatory for applications on or after this date. Lenders may implement earlier.
  • Nov. 2, 2026: UAD 3.6 becomes mandatory for all new appraisal submissions to UCDP. New UAD 2.6 submissions receive a Fatal / Not Successful status.
  • Jan. 4, 2027: for Full Review condo projects, the minimum replacement-reserve allocation rises from 10% to 15% of annual budgeted assessment income.

Pipeline warning: the UAD 3.6 mandate is based on the initial UCDP submission date, not the application date or appraisal effective date. Manage October appraisal pipelines accordingly.

UAD 3.6 and the new URAR

UAD 3.6 aligns appraisal data to MISMO 3.6 and uses one flexible URAR structure instead of separate legacy forms per property type. Expect a dynamic report that adapts to the property, far more structured data, new terminology, and a new workflow for rental information inside the report. If a UAD 2.6 appraisal was initially submitted before Nov. 2, 2026, revisions may continue on that DocFile ID during the retirement period - but a brand-new 2.6 report submitted after the mandate will fail.

What happens to Form 1007

Under UAD 3.6, Form 1007 is generally not used to develop market rent. Market rent is developed and reported inside the URAR Rental Information section and Rental Comparison Grid, including for ADUs. Fannie permits a narrow exception if the need for rent arises after the appraisal is complete and the original appraiser is unavailable. Practical takeaway: "order a 1007" is no longer the universal answer, so appraisal orders, AMC instructions and underwriting checklists need to match the UAD version in use.

The new rental-income framework

  • At least 12 months of property-management experience is generally required to use positive rental income as additional qualifying income. With less experience, rental income is generally limited to offsetting the related PITIA.
  • A newly executed lease dated within two months of application generally needs a minimum six-month term when the property is not on the borrower's tax return.
  • The initial rental payment must be due on or before the first payment due date of the subject mortgage.
  • For properties not on the tax return, the lease cannot be with an interested party or family member, and the lender must validate the lease is in effect - typically two months of rent payments or a permitted alternative.
  • Leases cannot be used to determine qualifying rental income for a departing residence, or for an investment property purchased within 45 days of the subject property.

Departing residences: the lease shortcut is gone

Market-supported rent replaces the old "sign a lease and use 75%" habit. Document rent with a complete appraisal with market rents, Form 1007 where applicable, or market-analysis tools with at least three comparable rentals. Take gross monthly market rent times 75%, subtract the departing-residence PITIA, and if the result is positive it may offset that PITIA only. A negative result goes into DTI.

Example: a departing home with $3,000 PITIA and $3,600 market rent produces $2,700 after the 75% factor - a $300 monthly loss counted in DTI. A signed $4,000 lease does not override the framework. If the borrower has less than 12 months of property-management experience, verify six months of reserves for the departing-residence PITIA, on top of other reserve requirements.

Special rental scenarios

For an investment property purchased within 45 days of the subject property, leases are not permitted to determine qualifying income; document market rent through the permitted appraisal or rent-schedule method, and for multi-unit properties market-analysis tools with at least three rental comparables. Short-term rental income (Airbnb or VRBO-style) is eligible for one-unit investment properties only, and the use must be legally permitted.

Condos, ADUs and manufactured housing

Project review continues to tighten and loosen at the same time: Limited Review is retired, small eligible projects gained an expanded waiver, the 50% investor-concentration limit was retired in established projects under Full Review, reserve-study requirements are stricter, and the Full Review reserve allocation rises to 15% in January 2027. ADU, manufactured-housing and highest-and-best-use changes are covered in the full playbook.

Educational, not underwriting approval

This is an educational summary, not a substitute for the current Selling Guide, DU findings, lender overlays, legal advice, appraisal standards or a case-specific underwriting determination. Primary sources: Fannie Mae UAD 3.6 FAQs and forms-redesign timeline, Appraiser Update (March 2026), Selling Guide B3-3.8-01 and B3-3.8-05.

Author: Abdel Khawatmi with PRMG Got Mortgages | 201-679-0422