Renting Out Your New Jersey Home Instead of Selling It
Program and regulatory figures verified September 25, 2026. Details change; confirm your scenario with us.
In New Jersey this route has an unusually concrete advantage: it is the one structure the State does not tax. The question is whether the rest of the file can stand without proceeds.
What it avoids
Both of New Jersey's seller-side fees attach to recording a deed. The Realty Transfer Fee applies on a graduated per-$500 schedule, and above $1,000,000 of consideration the Graduated Percent Fee stacks on top, starting at 1% of total consideration and rising to 3.5%.
Keeping the departing home records no deed, so neither arises. On a home over a million dollars that is a meaningful number, and it is the clearest financial argument for this structure anywhere in the round. See the seller-pays page.
What it costs
The proceeds. There is no sale, so there is nothing to retire a bridge loan with, nothing to pay off a second mortgage, and nothing to apply as a principal reduction on a recast.
That means the file has to work on income and reserves alone, with the departing home's payment either offset by rent or carried outright. It is a real trade rather than a free lunch, and for many households the proceeds matter more than the fees.
The lease will not help your loan
Fannie Mae Selling Guide B3-3.8-05, dated 09/02/2026 under Announcement SEL-2026-08, ends its documentation section with a flat statement: lease agreements are not permitted for any departing residence.
Acceptable evidence of monthly gross rent is a complete appraisal report that includes market rents; a Single-Family Comparable Rent Schedule, Form 1007, for the occupied unit; or market analysis tools such as Zillow, Redfin or the MLS using at least three comparable rental properties from the same market area, including subdivision or project where possible. The lender must also document a current housing payment first.
What the income is worth
Adjusted net rental income is monthly gross rent times 75%, then minus the departing residence's PITIA.
Positive, and it offsets that property's PITIA and stops there. Negative, and the shortfall is added to your debt-to-income ratio. The best available outcome is that the old house stops counting against you, which on a New Jersey property tax bill is worth having.
Reserves and the 12-month line
B3-3.8-05 requires six months of reserves covering the vacated property's PITIA when the borrower has less than 12 months of property management experience, in addition to reserves required for multiple financed properties. Most first move-ups have no landlord history.
If the departing home has more than one unit
The lender obtains the most recent year of individual federal income tax returns, IRS Form 1040, to support rental income received for tenant-occupied units. Those units follow the non-subject-property guidance, and the vacancy factor applies only to the unit the borrower occupied.
Compare the routes on the structures page, run the arithmetic on the net proceeds page, or start from the New Jersey guide.
Frequently asked questions
Does renting out my New Jersey home avoid the transfer fees?
Yes. Both the Realty Transfer Fee and the Graduated Percent Fee attach to recording a deed, and keeping the departing home records none. On a home over $1,000,000 that avoids a fee starting at 1% of total consideration.
What do I give up by renting instead of selling?
The proceeds. With no sale there is nothing to retire a bridge loan, pay off a second mortgage, or apply as a principal reduction to fund a recast, so the file has to stand on income, the rental offset and reserves.
Can I use a signed lease to document rent on the New Jersey home I am leaving?
No. Fannie Mae Selling Guide B3-3.8-05, dated 09/02/2026, states that lease agreements are not permitted for any departing residence. Use a complete appraisal including market rents, a Form 1007 rent schedule, or market analysis tools with at least three comparable rentals.
How is rental income from a departing residence calculated?
Monthly gross rent times 75% for net rental income, then minus the departing residence's PITIA. A positive result may offset that property's PITIA only. A negative result must be included in the debt-to-income ratio.
How many months of reserves will a first-time landlord need in New Jersey?
Six months of reserves covering the vacated property's PITIA, because that applies when the borrower has less than 12 months of property management experience, in addition to any reserves required for multiple financed properties.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal, tax, or real estate advice. New Jersey's Realty Transfer Fee and Graduated Percent Fee are administered by the New Jersey Division of Taxation and exemptions depend on your facts; your closing attorney, your CPA, and your real estate agent each handle their own part. Loans are subject to borrower and property qualification.