Here is snipped from an article about the anti “buy and bail” requirement. It mentions that Freddie Mac requires the 30% equity, but I’ve heard other lenders are also requiring it.
Under the new Fannie Mae guidelines, in most cases, a borrower now must have at least 30 percent equity in his house to buy another. Otherwise, he cannot use the rent he says he will get to prove he can support two homes. The deterrence is that no one would want to walk away from a house in which he had a large amount of equity.
Also, the rental income the borrower claims now must be fully documented.
Fannie & Freddie have the “buy n bail” rule, so does FHA. The OP needs to realize that if their goal is to get a bigger house they must first sell, then rent, while saving for a bigger down payment. Even if the OP had 20% down payment they would still get denied because their current residence doesn’t have enough equity in it.
