Could I deny over this?

Therefore, they are denying (so far only verbally) me the loan because the rental income is not high enough to pay for the mortgage, regardless of my financial ability even though I will be living in the property myself.

If all of your requests were about inspections and repairs, they may have a point, but they would still respond denying.

My brother in law was going to do that, checked on it, and they figured he must be planning to illegally rent the place out, and was denied.

Property manager must review the request and can deny under certain circumstances.

The Zoning Variation/Change is a lengthy and expensive process, it requires you to have fully prepared Architectural drawings, stamped and submitted to the City of Chicago by a Licensed Architect or Structural Engineer, then you have to wait for the Zoning department to Deny it (Which can take 8 weeks alone, or you can pay $1,500 to have an In-Person zoning review done in a shorter time period, but i'm not sure how COVID has effected this).

NJ will not deny the owner of a property from occupying, once current lease runs out you as the owner have the right to occupy property and make it your primary.

But entry cannot be denied.

She applied for her permit and was denied and is getting ready for the appeal.  

You want to only relay facts which are (according to your post) that you just discovered the issue, not an opinion which would help them deny your claim.