Hi @Josh Walker,Your lender local to Detroit must be using some homeowner's insurance premium "shouldn't come in higher than..." assumption(s) to qualify people because HOI is part of DTI.

If they 100% cant qualify without a co-signer and the co-signer doesn't qualify then they are out of luck. 

not sure about your experience but the second loan you got sounds like a great deal.most lenders really price by experience to get the really low rates very few will qualify for the best rates..Experience has more weight that fico in the HML world. 

Would you buy many SFH's or would you by a few 2-4 unit MFH's or would you go for the big one and use all $500k as a down payment towards the biggest MFH you could find that you qualified for? 

He had told me that I’m not qualify for primary residence due to me not living within the qualified distance.

It just depends on how the loan is structured, your FICO, and your experience/qualifying income. 

So even though I could qualify for new financing based on the anticipated rental income of this new house across the street, I don't have enough saved for the 25% downpayment anymore. 

I'd talk to a Qualified Intermediary before you make a plan.It looks like the government may pass 100% Bonus Depreciation. 

You also have to qualify for Chp 7, you don't just get one.

What I have found is that right around 2-4 properties, most people are tapped out on DTI and are unable to qualify using a conventional loan.