I think the guidelines have changed a bit regarding your situation. I was having a discussion with a senior mortgage underwriter a couple of months ago about this exact scenario, and from what I understand, you now have to have equity in the property you want to convert into a rental. If you're going for a conventional mortgage, you need to have 30% equity in the existing home, and for an FHA loan you need 25% equity. (In other words, if you're in a short-sale situation or you're somehow underwater with your existing house, you may not be able to do what you're looking to do.) The reason for this requirement is because the lenders are afraid that you'll just use the rental of the property to qualify for the new mortgage, and then walk away from the property. So, they slapped the equity requirement to not give you a reason to walk away.
If you DO meet the equity requirement, then you can only use 75% of the monthly rental on a conventional loan to help qualify for the new mortgage (85% if you're going for an FHA loan).
Please don't take what I've said above as the gospel. I am not a mortgage loan officer and the above is only based on a conversation I had with an underwriter. Although a very reliable source, the information is over two months old, so it's possible some guidelines have changed. You MUST speak with a qualified mortgage professional, who will then assess your situation and go over your options. You may feel free to contact me if you'd like some guidance.... more