He did say I can use gifted funds, which is a relief because the deal will fall through otherwise.My main question is this: why does the FHA require reserves on 3 & 4 unit properties if they've already approved me, based on income, for PITI that I can afford on my own?

They said "evict us if you can still afford it".So we threw them out too.Now, our 2nd floor tenant, which has been ducking us on the rent, told us that we need to pay her 3200 in cash or she won't pay rent anymore either.She is saying that we owe her the money because the hallway lights are on her electric bill and it's "illegal" to be set up that way.The 3200 is for her electric bill.Thing is, it is NOT a common area. 1st floor has their own private entrance, with their own lights, on their own bill.The hallway in question is specifically for the 2nd and 3rd floors.

If my credit score is 600 and I get a fully amortized 20 year loan that is affordable and appropriate under the circumstances that should be fine.

And they have no money for the down-payment, a credit score of 403, and they can't afford monthly payments of more than $450 per month.

Its very affordable and could MAKE you infinitely more money than it costs.

And in this lower rate environment, investors can afford to pay higher valuations (lower cap rates).

If they say they can't afford the programs, then I ask them why are they expecting me to give them my time and knowledge for free!  

Can the gf afford the costs if she gets zero clients for 6 months?

If so, why was he looking for a housemate situation before, if he could afford that?

HUD is "Housing and Urban Development" the intention of HUD is to provide affordable housing and development of affordable housing opportunities.