The down payment is currently at just under 5% if I did the math right.

This math will get better as you will have more beds in the house. 

I thought I did all the math (Federal capital gains, GA taxes) but panicked when I realized I'd likely have to pay CA capital gains on top of these?

The CoCR math shows that getting a mortgage is about .5% BETTER CoCR. 

but do the math. 

Keeping the math simple, if the ARV is $200k, and IF there were a 30% spread on this deal, that would give you $60k of equity after rehab (not including equity from any down payment).

I would guess that in the future you would qualify.Also, your math is a bit off above but I wouldn't really worry about it.  

Do the math, pay taxes now on a small amount or pay taxes later on a larger amount, it really doesn't matter - this is very true when making the Roth Conversion decision and is pretty close on distributions.The issue is the penalty! 

The math is pretty simple on that one. 

But your math is really incomplete here.