HELP with structuring owner finance/lease option?!?

[Bill Goodland]

Hey BP community. I could use some feedback on an owner financing or lease option strategy on a deal I might have found in Elkins Park, PA(Abington Township). Nice turnkey looking 3/2 SFR listed for rent or sale so I contacted the seller to see if I could creatively figure a deal out. Looks like they bought it in 04, are under water on the mortgage, tried to previously sell it and instead rented it out for $1,800 a month. Listed at $1,850 rent now and she'd be looking for 230k financed or 200k cash if she sold. I threw out the number 190k first as the max I'd be willing to spend(looks to be about 225k ARV). I am going to be a graduate student in the area and would be interested in house hacking, however I don't believe I would qualify for financing as I will not be employed once I move there for school. Currently have a good chunk of savings and was thinking about offering 190k with 5% down($9,500), 5% interest and a 5 year balloon when I would easily be able to get conventional financing if not sooner. Under that circumstance, my PITI looks to be $1,325 a month and I could get easily get $600 for each of the 2 extra bedrooms from classmates. Another option I thought was to lease option $600 for the option, $1800 in rent, $400 of which goes towards equity if I were to purchase the house at 200k in 3 years giving me 7.5% down(15k) where I could come in with the rest to get conventional financing and purchase the property. I know its not a smoking deal by any means, but she seems motivated and would be the ideal house and location for me. Am I better off finding a cheaper place to just rent a bedroom for $450 a month for 2 years or try to make this happen? Any feedback on what you would do or how to structure this would be greatly appreciated.