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Keeping our current home (second property) as a rental. Will it interfere with purchasing a third home?
There's a couple issues to consider: When you sell your primary home, the IRS gives you a $500k exemption (married, filing jointly) on gain.  If you decide not to sell your current house now, and you subsequently fall outside the ownership/use tests, then you may owe taxes on any gains when you sell the house. Rather than being concerned about your net debt, you should be concerned about your monthly debt payments.  Generally speaking, you cannot have debt payments of more than 36% of your monthly income.  If you can secure a renter for your current property, then you may be able to reach this ratio for your next (third) property. Also, only 75% of your expected monthly rental income is considered for calculating your 36% number. (This is not an exhaustive list of risks you expose yourself to). The largest risk is if you or your spouse find yourself without income (e.g. lost job, accident/injury, no renter), then you may be hurting to make your monthly debt payments.   You will need to be confident that you can pay all your debts.  A good rule that I hear is having the ability to pay 6 months worth of debt.  This may not necessarily mean having 6 months worth of cash on hand, but access to that money through personal lines of credit, borrowing against assets, selling stocks/investments, etc. You also want to make sure that your insurance policies fully cover you in the event that a tenant sues you, damages property, etc.  You also don't want to face a situation where you are sued because of discrimination.  Hiring a property management company to take care of these things may be a good peace-of-mind.