Renting is a very good solution. And you may be able to get another FHA loan. As long as you can qualify for both amounts, that is not an issue. But there are some circumstances when rental amounts can be considered.
Renting your home through a Broker is the best bet to ensure your success. There are no guarantees, but at least we know what to look for and check in a tenant's rental. The only other alternative is coming to the table with money when selling your house. Probably not an option, but worth mentioning.
You can get the best deal ever on what you are going to buy, so this is the best idea. Plus it will alleviate your space needs. Just remember with rental. There always has to be the what if. What if your renter doesn't pay, you will need to ensure you will still be OK to pay both mortgages for a few months. You don't want to run the risk of losing both.
Remember, rules are different in different areas. You have lived in the home a long time. You will need to check, but I have seen several of my clients do this with no problems. Even go to the same lender for the second loan.
Please contact me if you are looking for specific information. I have just had a few clients do this very thing, so I am pretty current on this topic.
RE Marketing Consultants, Inc.
A lot of people have been in your situation over the last three years; there is no easy way out, no soft landing.
The best suggestion I can give; if you afford your monthly vig, stick with it for another year or two:
The consequences of a Shortsale or Foreclosure is probably more than you will lose by paying on a dead horse.
A Shortsale would be second best; talk to your Realtor and the Loss Mitigation department to your Lender.
Good luck and may God bless