Do you have a VA or conventional loan?  

Happy to help you set a plan, but everyone else is right that $600k is out of your budget currently.Whatever you end up doing, I would recommend looking into conventional financing though.

I will not be able to do a cashout refi with a conventional lender for 12 months, and although Fannie and Freddie require a 12 month seasoning period for cashout refi's, it seems most convetional lenders, even in a straight out refinance (with no cash out) require 12 months as a policy.Does anyone have any recommendations for long term lenders that will balloon me out on a long term loan?

STR (if more than 50/100 miles from your home, or at a destination like lake house or beach house), allows you to put 10% down vs 15/20% down for conventional financing. 

Rates for seller financing are typically higher than conventional mortgage rates to compensate for the increased risk.

So it's a conventional owner occupied loan with 20% down.

@Gabriel Graumann actually this is a multi unit property where there are 2 parcels (2 building adjacent to each other 4 units on both sides).we are working with a lender who has agreed to do a conventional loan as it has only 4 units on each side (so 2 applications) - lets see how things go.

You would have to refi your FHA into conventional on the one you live in now, which would probably work and you could be at a better rate also.

I think one of the key things here is that is the lender primarily one focused on conventional/owner-occupied agency loans and just dabbling with investment property loans in a challenging market or a truly 100% focused investment-property lender. 

I could do an all cash, but would prefer to do a conventional loan.