HELP! How can I afford $85k for $60k?

[Christopher Fink]

Here's the situation: I am looking to purchase my first investment property in Denver, CO and I intend to split the upstairs and downstairs with secured entries to both for rental units - upstairs 2 BR/1 BA, downstairs 1 BR/1 BA. 

I have about $60k (stocks, savings) in liquid assets and another $65k tied up in retirement accounts. Because this is considered an investment property, the mortgage company wants 20% down on the $400k property which would come to $85k or so with closing costs. We were hoping to bridge that -$25k gap by using an unsecured loan or through a gift from family members. However, we're  being told that neither sources of income are acceptable for an investment property. I was told that I could liquidate a portion of my retirement accounts and then reimburse with a family gift and if it's within 60 days we wouldn't pay a penalty, but that seems a bit sketchy. 

A caveat: our tenant in the 1 BR would be my sister (in-law), so that may add an element of ways to get creative with financing.

I have a stable job/good credit and my preference would be not to get our sister on the contract, but she also has great credit so will if it's absolutely necessary. Sorry to be so wordy, but thoughts? 

Could we do the deal as a primary residence and then take over her portion of the ownership in years ahead since she would not be putting up any capital? What sort of tax implications/shelters would I be missing out on as a result of having her on the loan?

Thank you BP!!