Nothing you mention is "ordinary" and you should charge for all of it. dodged a bullet there thats a very good price take it from the security deposit and call yourself lucky. 

Depending on your debt to income, you might have to sell or have an executed lease to secure financing to buy the second home.

Legal Protection – It's important to have a solid contract in place, typically a promissory note and a security agreement that outlines the loan terms, interest rates, repayment schedules, and collateral (often the property being financed).

.- I will keep their security deposit for funds owed.- I will do my best to garnish future wages until their debt to me is paid in full.This has worked 100% time so far.  

This is primarily what makes their work product substantially lacking in correct English grammar, legal protections, timely professionalism and many other ways any Securities Attorney will point out to investors.

It is the interest rates at which banks lend to each other and is short for Secured Overnight Financing Rate. 

2.Are there strategies to reduce the required down payment or secure better mortgage terms?

Possible (but I doubt easy) if seller takes a 2nd / subordinate position to the bank or is secured by other property you own.

Security investigated to find the renters still at our house.

Non-recourse has less personal exposure, but you need a very strong balance sheet to secure this without bringing in a KP.