Looking for a creative solution/advice with FHA

[Heather McCraw]

I'm hoping someone with a lot more experience than me will be gracious enough to share some solutions I haven't thought of. I am under contract to buy a new home. My plan was to reconvert my existing home into a rental and keep it. (I used to rent it out, but moved into it after my divorce in 2010.) However, I don't have a ton to put down on the new place, and with PMI skyrocketing over the last year, if I go with a conventional 97% on the new house, the PMI throws me over the D/I threshhold. I can't go FHA because the existing house has an FHA loan on it. SO.... my lender is advising me to sell the existing house, which I've been trying to do on my own because the market has not fully recovered here and market price is barely more than I owe. I do have an assumable mortgage, which is a big selling point, but FHA requires that it is owner occupied, so that narrows the field of potential buyers. I'm sure there are lots of things I haven't considered. If anyone would be willing to share some advice, I would be most appreciative. Thanks so much.