I believe the code says "if a veteran holds legal title to a property secured by a VA loan but does not possess equitable title, this situation is considered 'not a disposition."

If you've not read Debt Cleanse, you should.

It's debt you'd still have to pay back, but at least you will not touch one of those two amazing interest rates. 

National debt versus GDP3.  

Lenders usually determine whether properties are lendable based on the debt service coverage ratio. 

And you do not technically have to replace debt. 

THEN, I plan to purchase the second home using a FHA or conventional loan (3%-5% down), for which I will likely pay the monthly cost out-of-pocket, maybe with some rental income support if it is a duplex.My concern is, I do not want to spend my savings or weigh down my debt-to-income ratio so much so that I cannot qualify for and pay the down payment and closing for the lending on the second home.Questions: - With the first home being multi-family, 75% of the rental income (or potential rental income initially) will relatively either maintain or boost my debt-to-income ratio from lenders' perspectives, right? 

If you don't have the extra cash, can you get creative with a private lender or partner stacked on bank debt? 

You've done a great job with keeping your debt low so I have no concerns about your level of discipline to use/reuse a line of credit.All the best!

(Your $12k down and your new $24k debt.)The “trick” in regards to less than 10% down is people think they bought and asset or have equity.