What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.?

Assumption by an EntityUnfortunately, assuming a VA loan directly through a legal entity (such as an LLC, corporation, or trust) is typically not allowed because:Primary Residence Requirement: VA loans are designed for owner-occupied properties, meaning the assuming borrower must intend to live in the property as their primary residence.Credit Review: The VA and lender require the assuming party to undergo a personal credit and income review to ensure repayment ability, which entities cannot satisfy.3.

Credit scores are made up of many factors, one is the utilization of an account vs its credit limit.

One option is to give the front house a credit for water based on averages, but I don't know if I would agree to that as a tenant. 

Can her status and credit be of help as well?

If you choose not to show up, he would almost certainly be awarded a judgement.Of course, you could choose not to pay the judgement, but then he can send it to a collections agency and your credit score will be trashed.I don't see a scenario here where you get through this cleanly.  

I’ve used all the rental cashflow since I started investing to buy more and more houses, or to pay off 401k loans and 0% interest for a year credit card loans to scale up.

When you first approach the homeowners about helping them out of their property, you'll want to let them know that you aren't going to save their mortgage you're just trying to give them a clean escape from having that defaulted mortgage on their credit.

., a duplex or multifamily), you may qualify for a conventional loan with as little as 3%-5% down.HELOC or Cash-Out Refinance: Use the equity you’ve built in your current property to secure a Home Equity Line of Credit (HELOC) or cash-out refinance.

Backstory: 22 years old about to get out of military after first contract. 70k cash saved up & 775 credit score, no debt.