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

Don't expect rates to come down. 

I do not understand your remark as related to the DSCR loan.  2 ADUs are not allowed by f/f conventional financing but is not always enforced.Fortunately if you stay with the current tenant without a refi, by the time you pay principle it is likely the rent will have increased enough to absorb the increase mortgage payment. 

While the 4% mortgage is great, your 1M in dead equity isn't giving you a great return.

Here's a bit more in detail about how rates are calculated for DSCR loans:1.

. • Single unit properties get pro-rated.

I make around $110k+ per year, live off around $75K, have a mortgage ($1900/mo for rent, escrow, tax), around $40K in equity, and no other debt. 

$40,000 x 25%(assuming a 25% interest rate on credit cards) = $10,000This is more than the annual cash-flow that you are getting from the rental.I would look at a way to paying off the credit card debt asap.Look to see if you can take a HELOC on the investment property(likely difficult).If you can't you may want to consider selling the proprety.You will also feel a lot of relief of not having credit card debt hanging over you.What is the interest rate on the car loan?

The key is for you to separate the utility costs from the rent, then advertise your units with the rent rate only and explain the utilities later.HOW TO SHARE UTILITIES 101You have a property with two or more units and the utility meters are shared.

For $10K and a lower rate I'd be willing to consider delaying...but only if I knew that lender two was solid on closing in a relatively short timeframe.