The principles of Leverage work equally for the young and old.

During the process they "refinanced" the property and paid back some principle to the investors.  

Based on what I have heard so far, I believe you can structure this to qualify but trust me when I say any good QI's and the two I mentioned above are, well known, respectable, ethical and more than capable of answering your question. 

Would love to get some schooling from you more experienced Pro's out there on the best completely legal and ethical way to structure this.

Many ignore the issue and have no intention of operating morally and ethically.

Would love to get some schooling from you more experienced Pro's out there on the best completely legal and ethical way to structure this.

I want to do things, morally, ethically, and legally right.  

That gives you different ethics and access to the MLS.Hope it helps some and good luck with your investing

There will be very little actual equity in the house if I borrow all the money.If I only borrow 110K, my monthly principle, interest, taxes and insurance ( PITI ) will be $745.

Do business ethically and you should never have a problem.