I am in Lexington KY which is somewhat landlocked because of the Horse farms that surround the city (no room for the city to easily spread).

There is also a horse barn and horse fields that could be rented out, a garage, and several small utility and storage sheds.

Don't put your cart before the horse. 

I thought it was limited to dogs and mini horses, tho I could be wrong there.

I'm told the machines are easy to work on, rarely need service, and worth keeping since they are work horses. 

You make it sound like you bought a race horse and went out and put a saddle on it and climbed on and were surprised that it turned out to be a cow. 

Home is on 3 acres horse property but home is in bad shape and only 2 bed 1 bath and will not qualify for fha loan.

I've heard the older Rams are work horses and did consider that as well. 

To be honest, aside from being off by a couple thousand, my explanation is every bit as down to Earth as the "you're really starting a new loan with a shorter term and hypothetically lower payment" thing, if not more, so don't hurt yourself getting down off of that high horse.

1) the city is not very attractive (disjointed development, only one grocery store, cheap retail offerings, etc) 2) they continue to allow driving on the beaches and the rednecks/kids drive crazy so you really have to watch out especially with small kids, 3) during the summer season they allow horse riding on the beach and you will see several "companies' with trailers of horses for rent.