Investment Property vs Primary Residence

[Patrick OToole]

Question for the community!  I am a first time home buyer and have been saving/studying/networking this past year to do so.  I am running into an unexpected dilemma as I have began to put offers in the past two weeks.  

As a newbie 'investor' and lifetime renter, I wanted to purchase my first property as my primary residence and put 5% down and use the remaining money for the rehab, a couple months reserves, and then get renters in there ASAP.  That has been my plan this whole year of saving!  In my research, I must have overlooked the difference or the seriousness between the different types of investments (Primary home, 2nd Home, and Investment property).  I had read about house hacking but was really trying to get someone on a lease for the entire property and I did not realize that there were loan rules regarding 'moving in within 60 days of closing and actually living there for at least a year before legally being able to rent it out fully. Rookie mistake, I'm realizing.  I am in the dilemma now about how to truly address the loan and property as an investment property vs my primary residence, which would ultimately come with the higher interest rate and much larger down payment of 20 to 25%.  I'd love to conveniently ignore the red tape and get renters in to cash flow but I am pretty concerned about the "F" word regarding the loan.

What is the community consensus on this?  Is this dilemma routinely ignored if you don't have the money for the 20% down payment?  In my research it seems like a mixed signal of you can "get away with it" to this would be legit loan fraud with potential foreclosures if the loan is pulled and jail time.  Not trying to do that, but just trying to get in the game!!!