Can't get a loan due to debt to Income... Ideas?

[Callum K.]

Hi!
I have been lurking around BP for a while and am very much appreciative for all the insightful information.

I recently sold one of my businesses and have plenty of cash to go buy multiple properties. I already own two properties and am about to rent out my primary residence as well. My problem is that despite the fact that I can pay for my new home outright (which will be owner/occupy) multiple times over I am trying to only have to tie up as little capital as possible, however I have been told that I cannot be pre-approved for a loan due to my debt to income ratio (DTIR).

My income is representative in the form of two W2 incomes, a 1099 source from the acquiring company as a consultant during the transition and one home that has been producing rental income for 2.5 years and another home that I bought in July that is producing rental income. My problem is that these homes are more pricey than typical rentals and I have mortgages on them which has brought my debt to income (especially now that one of my businesses has been sold) to levels just over 50% DTIR. I have struggled to find a lender willing to lend to me and I am thinking I just need to rent a place until my rental income from my home I bought in July and my soon to be rental income from my current primary home can be seasoned. That unfortunately puts me into spring of 2014 before I can do anything. Below are a couple questions I am struggling to get answered:

1. I have read here about the "buy and bail"program that should allow me to utilize my current (future rental) home income so long as I meet strict standards. I have seen the reference documentation on fannie mae's website, but no bank I have spoken to has even heard of this. If I can get them on board with that, then I can reduce my DTIR to reasonable levels. Has anyone had experience in using this program and/or does it still exist?

2. I keep hearing that you must have tax returns for 2 years showing the rental income and as of Oct 20th, it is only going to get worse. If I rent my home out in December of this year, will December's rent allow me to meet that requirement for the first year of showing it on my taxes or will they average the total rent out over the other 11 months or will they calculate it in some other form? I guess what I am asking is by "2 years on your taxes" does that mean 2 tax returns or a full 24 months of rental income on your tax returns?

Thanks in advance for any input!