Cash-out Refinance on Primary to buy new primary

[Jonathan Armoto]

I'm sure this has been brought up before, but after searching the forums, I'm not sure I see a direct comparison.

I owe about $69k on a property that is worth about $120k. FHA at 6%. Credit score is in the low 700s

I'm looking for a new primary and would like to use this as a rental.  I can probably get about $1400/mo in rent, so it fits the 1% and 50% rules.  

1) If I were to do a cash-out refinance, my understanding is that I would affirm that I plan to stay in it for 12 months. Can I cash-out refinance it into an investment property? I had planned to cash out 80% - or about $96k. $27k cash before closing costs. Would the difference just be in the rate I get? Or the LTV, too? And is there a way to estimate closing costs?

2) My DTI would be about 55%. Is it enough to just get a signed lease for that rental income? I would not have rental history, but it sounds like some lenders will consider it. My mortgage would only be about $500, so I think it would make a good rental. My other concern is the timing in putting in an offer on a house while trying to line up a renter, but that is probably among the least of my problems.