Go around the nation, you'll notice this is a common trend.You need to bid deeper, and agents need to start pricing things more appropriately. 

With expert guidance, tailored training, and a supportive community that will align you with the tools you need to fast-track your success and avoid common pitfalls.

This is probably common among buyer prospects, too.

What is common and what people expect and by people I mean the people who would live in that finished unit not the peanut gallery.

The primary form of diligence we see on the forums is "what do you think of XYZ sponsor and deal" whereas the common form of diligence in the space by institutional investors, large investment groups, family offices, and sophisticated investors involves following the sponsor for years, underwriting the deals, validating rent comps, background checks on the general partners, and a host of other diligence that materially de-risks the investments.  

What's common practice?

@Raj Vardhan, in my limited experiences, 6 or 12 month seasoning is common if you want to borrow based on new appraised value.  

Pros: Diverse job market, low unemployment, great resilience during recessions, nice appreciation, 1% rule can be hit if you look hard enough, great economy, good schools, Midwest nice.Cons: Extreme weather at times (hot/humid summers, tornadoes/hail, brutal cold in Jan/Feb), high insurance premiums, property taxes also really high.

It’s a sales pitch for you to invest with them at extremely lucrative rates for them.

I think they are just an extremely conservative bank and that is their interpretation of Fannie's guidelines.I have already gotten approved from some other banks (credit unions), so I'm not worried, but I am curious if anyone else has run into a bank telling them they need at least a 20% down payment on 3-4 units, regardless of it being FHA or not.