While mortgage rates remain elevated following September’s Federal Reserve rate hike, several recent agency updates have quietly created new opportunities for buyers. At the same time, new condo requirements and appraisal changes continue to reshape how certain transactions move through the financing process.
Here’s what loan officers and real estate professionals should be watching heading into the fourth quarter.
The Fed Raised Rates. Mortgage Rates Remain Elevated
The Federal Reserve increased the federal funds rate by 0.25% in September, its first rate hike since 2023. While mortgage rates don’t move in lockstep with Fed decisions, the announcement reinforces the elevated-rate environment currently affecting many buyers and industry professionals.
That doesn’t necessarily mean buyers should stay on the sidelines. In today’s market, successful buyers are often focusing less on trying to perfectly time rates and more on finding the right home, negotiating favorable terms, and creating a long-term plan that may include evaluating refinancing in the future if market conditions and the borrower’s individual circumstances make it beneficial.
For real estate professionals, this remains an important conversation. Affordability is still a challenge, but inventory and negotiation opportunities in many markets continue to create ways for buyers to move forward.
A Major Win for Move-Up Buyers
One of the most significant agency updates in recent months comes from Fannie Mae.
Fannie Mae recently updated its guidelines for homeowners who plan to convert their current primary residence into a rental while purchasing a new primary residence. Lenders may implement the changes now, but they become mandatory for loan applications dated on or after December 1, 2026.
Historically, many borrowers needed a signed lease agreement before they could receive credit for rental income from a departing residence. Under the new framework, lenders will generally determine rental income using an appraisal with market rents, a comparable rent schedule, or another supported market-rent analysis rather than an executed lease. The amount of rental income that may be used remains subject to Fannie Mae’s calculation, reserve, documentation, and eligibility requirements.
For buyers considering turning their current home into an investment property, this could remove a common hurdle that often complicated move-up transactions.
As always, specific eligibility requirements still apply, and borrowers should consult with a mortgage professional regarding their individual scenario.
Condo Financing Requires More Attention Than Ever
Condo financing remains one of the biggest industry changes affecting buyers, sellers, and agents today.
Both Fannie Mae and Freddie Mac retired simplified condo review options in August, meaning more projects now require a more comprehensive review process. Additional scrutiny may be placed on factors such as:
- HOA budgets
- Reserve funding
- Insurance coverage
- Deferred maintenance
- Overall project financial health
The takeaway isn’t that condos are becoming difficult to finance. The takeaway is that documentation matters more than ever.
For agents, obtaining HOA documents early in the process can help avoid surprises later in underwriting and keep transactions moving forward.
Large Deposit Documentation Gets Easier
Freddie Mac also made a welcome change for borrowers navigating the mortgage process.
Large deposit documentation requirements are now generally limited to deposits made within the 60 days preceding the loan application.
While documentation requirements still exist, borrowers may no longer need to explain financial activity occurring far beyond that timeframe. The result may be a more streamlined documentation process and fewer frustrations for both borrowers and lenders.
More Flexibility for Self-Employed Borrowers
Self-employed borrowers continue to represent an important segment of today’s housing market, and recent Freddie Mac updates provide additional flexibility in certain situations.
Borrowers who recently transitioned from employee status to self-employment within the same field may have more opportunities to qualify using their current earnings profile. Additional flexibility was also introduced for some professional partners receiving guaranteed payments from businesses such as law firms and accounting firms.
As always, documentation remains critical, but these updates provide additional options for borrowers whose income profiles may not fit traditional employment models.
Looking Ahead
Several industry changes are scheduled to take effect over the next few months, including the transition to updated appraisal reporting standards in November. While most consumers are unlikely to notice the difference, lenders, appraisers, and real estate professionals should expect continued adjustments as the industry adopts new reporting requirements.
Meanwhile, elevated rates, improving inventory levels, and evolving lending guidelines continue to create a market that rewards preparation and expertise.
For buyers and sellers, the opportunities are still there. For real estate professionals and loan officers, staying informed remains one of the best ways to help clients navigate an increasingly complex market with confidence.
All loans are subject to credit approval. Program guidelines are subject to change. This information is provided for educational purposes only and should not be considered financial, tax, or legal advice.
