The longer term loans would have lowered your monthly payments and decreased the costs.As for rent, each year you need to look at rents in the area to decide how much you will be increasing the rent by. 

If not, you may have to qualify with the full mortgage payment against your debt to income ratio, including the new home that you are looking to purchase.From a tax standpoint, you may want to speak with @Natalie Kolodij. 

Plus, I'd prefer to take baby steps before investing out of state where I could better afford a 25% down-payment.

Since you haven't started the project yet, use this time to network with lenders to see who offers the best terms....seasoning, rate, leverage and pre-payment penalty terms. 

Both of these allow you to low down payment loans to buy a primary residence with fixed interest rates.

Be aware if their payment is clearly labeled "for rent only" or similar, and in that case, only apply it to rent. 

Many Gen Z buyers, however, are still in the process of securing their down payment funds or comparing loan options when they start making offers, putting them at a significant disadvantage.Looking AheadDespite these challenges, Gen Z homeownership demand remains strong.

As already mentioned, you could sell via seller financing to lower AGI, as all you would have to claim is the payment income - until balloon payment received.Did know an investor that had 14 properties paid off and he moved into one every two years to then sell with the $250k single exemption.

This means sizeable monthly payments, but if utilizing with Value Add you can pay off the loan without a pre payment penalty at any time.Hope this helps!

While I love the idea of eventually owning a paid-off primary residence, I’m debating whether it’s smarter to sell our current house and use the equity as a down payment on the new home or to keep it as a rental.