How does a rental property affect your debt-to-income ratio

[James Sutton]

Hell Everyone,

I'm trying to figure out how much the debt of my cash flowing rental condo adds to my overall "debt-to-income" ratio. 

I have a 2 year outlook and deciding whether it would be better for my wife and I to a) sell our house and move to the town where we want to be, b) stay at our current home and purchase a rental property, or c) buy a new house, move, and then rent out our current home we live in. I think a big part of the deciding factor for those three decisions will be what my debt-to-income percentage we will have and the ability to get a mortgage. 

The Condo: (Owned 6 months, rented for 5 months)

Purchased November 10th, 2015 - $122,000

Appraised when purchase (before $8,500 repairs) = $172,500

Mortgage + HOA + Insurance + Taxes = $856.15

1 year signed lease Rental Income = $1,500.00

Net Monthly Cash = $643.85

My Wife and I:

I have a credit score of 804 and she has 795

We will have 20% for which ever property we choose.

If I choose all the income we have (Gross Monthly) and take the Monthly Debt percentage, we both combined we have a "Debt-To-Income" of 28%. That includes the rental income, and monthly rental expenses.

Contractor:
As for myself, I am an offshore oil and gas inspection manager. I'm freelance and earn contract monthly sums. It's a bit hard for me to analyze my gross monthly. I question whether it would be straight gross, or, "after business expenses but before tax liability". Should my gross be based before or after estimated self-employment tax?

I feel like I'm on the line of making out my leverage and ability to get traditional mortgages or portfolio loans. However, I think I'll be able to get one more and it seems knowing which avenue will affect my debt-to-income the best will give me the best opportunity to get a loan. Then I can assess which method will best support improving our monthly cash flow and lifestyle goals.

Any advice would be much appreciated.