I am self employed but want to build a spec home using the equity in my house as collateral.

@Tim Holt, Yes INDEED house hacking is the best option for most 1st time buyers.  

There are actually THREE kinds of subject to transactions1- subject to existing mortgage without lender approval2- subject to existing mortgage WITH lender approval3- subject to existing mortgage as part of a seller financed wrap around mortgage.with #1 and #3 it’s in everyone’s interest to utilize a third party servicer, who collects and then distributes payments.  

I happen to be looking for gap funders myself for a number of my house flip projects in Houston, TX and finding gap funders or any kind of private money involves a lot of networking and putting myself out there to meet potential lenders.

I bought my first house when I was 24 and now have 5 relatively small properties in Michigan!

The loan is with you, not with your tenant, so none of that means anything to them - in fact because you live in one unit and it's under 4, if you were self-managing you don't even have to abide by fair housing laws (at least on the federal level). 

Current house is 2500 sqFt 4 bed 2.5 baths. 

House hacking is the best tried-and-true method for new investors in my opinion.

If I am house hacking then what should be the insurance.

I recently looked at an existing STR, but either the seller did not track the expenses or they did not want to provide them.