At present, Fannie Mae requires that prospective homebuyers who intend to convert their existing primary residence into a rental property must prove 30% equity in the current primary residence if the future rental income will be used for qualifying. If the current primary residence does not have 30% equity, then no rental income may be used in qualifying for the new mortgage AND the borrower must prove 6 month's worth of PITI (Principal, Interest, Taxes and Insurance) in reserve for the BOTH mortgages.
As always, only 75% of the rental income may be used for income qualifying.
In plain language, what this means is that:
1.) When you move to another state and rent out both sides of the duplex, you may only use 75% of the gross rental income towards qualifying towards the new mortgage. For example, if both sides of the duplex generate a combined rental income of $1,000 per month, you may only use $750 per month to "cover" the mortgage payment with property taxes and homeowner's insurace factored in.
2.) If your duplex has less than 30% equity when you decide to buy a new primary residence, you can't use ANY of the rental income. You would have to prove enough income to cover both the old mortgage payment (with property taxes and homeowner's insurance factored in) PLUS the new mortgage payment with property taxes and insurance factored in.
3.) If Number 2 above is true, you'd also have to have 6 month's worth of BOTH mortgage payments with property taxes and homeowner's insurance factored in in proven reserves after downpayment and closing costs for the new house are taken out. This would be in addition to any other reserves that might be required to qualify for the new mortgage.
4.) If number 2 is not true (ie you have 30% equity in the duplex when you decide to buy another home), you'd have to supply a signed lease AND either the first moth's rent payment or security deposit for both sides of the duplex (such as a copy of the tenants' checks and proof of deposit).
5.) The 30% equity in the duplex can be proven by an appraisal (ordered by the lender) or a Broker Price Opinion supplied by a Realtor.
FHA: If you decide to buy the new home (after you move out of state) with an FHA Inured mortgage, the same rules above will also apply... but there are two exceptions which might be helpful in your situation:
RELOCATION Exception: If you are relocating to a new employer (or being relocated by your current employer), you won't have to show proof of deposit of first moth's rent and/or security deposit by the tenants. A signed lease after the loan on the new home is closed is sufficient.
EQUITY Exception: If the appraisal on your duplex is less than 6 months old when you apply for an FHA insured mortgage for the new home, you can use that as proof of 30% equity OR you can show you have paid down the mortgage on the duplex by at least 30%.
NOTE: You can use an FHA insured loan to buy the duplex AND qualify for a second FHA insured mortgage to buy the new home out of state under FHA's general RELOCATION exception to the normal "One FHA loan at a time" rule. In other words, you could buy the duplex with an FHA insured loan, get a job out of state, and then get another FHA loan to buy the new home without being required to sell, refinance, or pay off the FHA insured loan on the duplex.
FURTHER NOTE: Consider an FHA insured loan for both transactions. FHA's low down payment and minimal reserve requirements could help you accomplish your goals - especially if you don't have the cash reserve requirements demanded by a conventional loan underwritten to Fannie Mae guidelines.
MOST IMPORTANT: Since your equity position in the duplex will be a huge factor in determining your total qualifying income, it is very important that you have a Realtor acting as your Buyer's Agent to properly advise you on the potential increase or decrease in value of the duplex over the time you expect to occupy it as your primary residence. That 30% equity requirement for both Conventional and FHA insured mortgages will determine if the rental income may be used.
Further, if the lender for the new home requires an appraisal of the duplex, the appraiser will be required to research typical rental income for proprties like your duplex. You'll need a buyer's agent to make sure your costs of ownership don't exceed what the market will bear (this is not only bad financially, but can also cause problems in using rental income to qualify for the new home even with 30% equity in the duplex).
You'v asked a smart question. Prior Planning Prevents Poor Performance.
Below are links to Fannie Mae's underwriting guidelines for Conversion of Principal Residence to Investment and FHA's rule for the same. Good luck!