A borrower's current home that will be retained after moving into a newly financed primary residence.
A departing residence is the borrower’s current primary home that will be retained after the borrower moves into a newly financed primary residence.
The old home may be converted to a rental, kept vacant temporarily, or listed for sale. In each case, the lender must determine how its mortgage payment and any expected rent affect qualification for the new loan.
Keeping the current home can leave the borrower responsible for two housing payments. The lender cannot assume that proposed rent will fully eliminate the old payment or that a planned sale will occur immediately.
A departing residence can affect:
The phrase describes the property’s role in the new mortgage file. After conversion, the retained home may also be treated as an Investment Property.
The issue usually arises during preapproval or underwriting when the application lists real estate already owned. The lender asks what will happen to the current residence after the purchase.
The answer leads to a different review path:
| Borrower’s plan | Main underwriting question |
|---|---|
| Sell before the new closing | Will the sale close and remove the existing debt before qualification is finalized? |
| Sell after the new closing | Must the borrower qualify while carrying both housing payments? |
| Convert to a long-term rental | What rent is documented, how much is acceptable, and how is the old housing expense treated? |
| Keep without renting | Can the borrower qualify and maintain reserves with both housing obligations? |
The lender may update the file if the plan changes. A home expected to sell but later retained as a rental is not a minor clerical change because debt, income, assets, and occupancy may all need to be reevaluated.
Depending on the program and the property’s status, documentation can include:
Not every document is required in every file. Newly converted rentals, established rentals, pending sales, and vacant retained homes follow different program rules.
The lender starts with the existing property’s complete housing expense, which may include principal, interest, taxes, insurance, association dues, and subordinate financing. It then applies any acceptable rent under the loan program.
Possible results include:
Gross lease rent should not be assumed to equal qualifying income. Program adjustments for vacancy and expenses, documentation quality, and the borrower’s rental-management history can affect the amount used.
Dana buys a new primary home and keeps the current condominium as a rental. The condominium’s full monthly housing expense is $2,000, and a tenant signs a lease for $2,300.
Dana cannot automatically add $2,300 to income and omit the $2,000 obligation. The lender first determines the acceptable rent under the mortgage program, then compares it with the complete housing expense. If the accepted amount is below $2,000, the shortfall can increase Dana’s DTI.