buying another primary residence

[Raky Patel]

hi all, this is my first post here but i have been lurking for a couple months now. i must say this is a great resource and thanks to all that share their experiences. i have some questions regarding buying another primary residence. here are some facts about my situation:

- I just got married last October and my wife and I each had our own house.
- I have a home in my name that has been rented out (less than a year) and live in my wife's house.
- The plan is to rent out my wife's house and buy a new primary residence leaving us with two rentals.
- We do not want to pull out any equity from either house and each has a rate lower than 4.5%.
- This is the first house we would be buying with joint ownership.
- Our debt to income ratio is around 35% if you factor in both of our mortgages.

Questions:
1. How do mortgage lenders look at this situation? I assume they will not count any rental income that has been received as the properties would not have been rented for 2 years however would the mortgage still effect my debt ratio if I was breaking even from the rental (I am making an annualized return of around 10%)?

2. I have read that you must have the equivalent of 6 months rent in reserves (not a problem) when looking for a new property if you are keeping one as a rental and it has not been rented for 2 years. Does this mean that this property would not be that heavily considered when determining whether or not we can get another mortgage?

3. Do the funds in question 2 have to be in a savings account or can they just be in an investment account or retirement account?

4. How much down can we expect to be required to put down if this was our 3rd mortgage and we were going conventional - 10% or 20%? Also, what percent of our income can we expect to be qualified for in monthly payments given the facts above?

Thanks,
Raky