refi or new mortgage for lesser value. Contingent on sale of current home?

[Teasha]

I'm wanting to sell my current home purchased for 173k and aquire a new mortgage for a less expensive home, 130k The house I have has atleast 20k in equity and is a fha with a 3.25% rate. I'm waiting on a CMA to establish an accurate price for selling my current home. I have spoken briefly with mortgage brokers on a refi but my dti is too high. Won't have a lot to put down on new mortgage due to paying down debt and splitting assets with ex.

How common is a mortgage approval if it were contingent on the sale of the current home? Should I bother with looking for a new property before a pre-approval? I could rent the house out, but how long do I need to show income from property before I could reflect this in a pre-approval? I know if I take the hit I have 45 days to shop but I'm not sure if I'm anywhere close to ready to move in that time frame.

I need guidance on what steps I need to take.  Any advise is very welcome

[StartingOver10]

It is very common for seller's to sell their home before purchasing another.

You said you tried for a refi and couldn't get it due to DTI - so the best approach, according to your own post, is to sell your home first. You don't have to close it, but get it under contract and then get your pre-approval to purchase the new lower priced home that fits your budget. Are there homes available in the $130k range in your area?