Fannie Mae's October 2026 Updates: What Changes for K-1 Income and Property Rules

Edward co-owns a business, and his income shows up on a Schedule K-1. He is thinking about buying a home, maybe a condo, and then he hears that Fannie Mae's October 2026 updates change how employment and K-1 income are verified and documented. At the same time, some property-related requirements, including Right of First Refusal and Attorney Opinion Letters, are being relaxed. What does he do with that?

Edward is a fictional character, but his situation is a common one for business owners. Here is how I would walk him through it.

What Fannie Mae changed

The announcement is SEL-2026-09, a set of Selling Guide updates. Two areas matter most for someone like Edward.

The first is employment and Schedule K-1 income. A K-1 reports an owner's share of income from a partnership or similar business entity. How lenders verify and document that income for loan qualification is changing, which means the documents a lender asks for may look different from what you saw in the past.

The second is property requirements. Fannie Mae is relaxing some of them, including Right of First Refusal and Attorney Opinion Letters. A Right of First Refusal gives a party the first chance to buy a property before it sells to someone else. An Attorney Opinion Letter is a legal opinion about certain property documents. Easing those requirements can mean fewer property-side hurdles on certain purchases.

What most people get wrong

Most borrowers assume the paperwork list never changes. They gather what a friend or a past lender told them and hope it fits. With K-1 income, that is risky, because the way the income is verified and documented is exactly what is being updated.

The other mistake is assuming the guide is the final word. Fannie Mae sets the baseline, but each lender applies the Selling Guide in its own way, and some lenders add stricter rules of their own. Two lenders can read the same update and ask for different things.

What Edward should do today

First, gather his K-1s and his business tax returns now, before he writes an offer. Having those ready means no scramble later.

Second, ask his lender one direct question: "How does the October update apply to my file?" That question forces a specific answer about his income and his property, instead of a general reassurance.

Third, if he is looking at a condo or a property where Right of First Refusal or an Attorney Opinion Letter has come up, ask whether the updated guide changes anything for that purchase and whether the lender has its own requirements on top.

I would not try to guess at the details. The announcement is public, and I recommend reading SEL-2026-09 itself, then confirming how your lender applies it.

Why a broker can help

As a mortgage broker, I can access multiple wholesale lenders. That matters when a file has business income, because one lender's interpretation may not fit while another's does. Instead of being stuck with a single answer, I can look at the options and find the path that works for the borrower.

If you are in Edward's position

If you are buying or refinancing around Charleston and part of your income comes from a K-1, or you are looking at a condo-type property, do not wait until you are under contract to find out what your lender needs. Pull your documents together and ask the question early.

Every situation is different, and I would be glad to look at yours. Call me, Jason Sharon, at 843-LOW-RATE.

Home Loans Inc - Jason Sharon, Mortgage Broker. Company NMLS #1728740, Jason Sharon NMLS #1281448. Equal Housing Opportunity.