Am I asking the wrong questions or do I have a misunderstanding of conventional loans?

What that guy did was misunderstand what I said, and because he has poor communication skills, he did not ask me what my plan was but instead assumed.

Don't misunderstand me  you can do as well or better in the market as in Real estate but you need to fully understand what you are doing. 

Just make sure to clarify the specifics of the incentive plan and put everything in writing to avoid any misunderstandings or conflicts later on.For your contractors, one way to incentivize them apart from referrals is to offer bonuses for timely and quality work.

Consequently, pending completion of the associated debit transaction, you should not withdraw from your bank account any funds that are the subject of this reversal.Here are some steps you can take now:If you believe this was an error or misunderstanding on your renter's part, get in touch with them directly and have them withdraw or rescind the dispute or fraud report with their bank or card issuer.

And I think a lot of people misunderstand the purpose and function of an LLC.

I think you misunderstand my point.

He says I'm not misunderstanding the contract and in this case it's better to ask for a price reduction, but HERE'S the kicker he then tells me to CANCEL any appointments I have with contractors (he only knows of one I have) until we know if this is going to go through.

The common misunderstanding between an FHA loan and conventional loan with less than 20% down is FHA loans have a Mortgage Insurance Premium (MIP) whereas conventional loans have Private Mortgage Insurance (PMI).

The discrepancy may be down to differences in state law or just misunderstandings.