Quote from @Griffin Malcolm: Open an LLC and apply for a small business line of credit from Key Bank.

Should We:Sell, take advantage of the capital gains law, move, and pay the mortgage off on the new house, credit cards, etc…?

You can look into switching to a local credit union or portfolio lender, as they tend to be more flexible with regional policies.

Her credit isn't the greatest, but she's super sweet and a hard worker, so you are certain it will work out.

There are a lot of rough areas here that look good on the internet but the reality on the ground is much different. 

This is much lower than the costs associated with refinancing.Benefits of Mortgage RecastingLower Monthly Payments: The most immediate benefit is a reduced monthly payment, which can free up cash for other financial goals.Save on Interest: By reducing your principal balance, you’ll pay less interest over the life of the loan, potentially saving thousands of dollars.No Credit Check or Appraisal: Unlike refinancing, recasting doesn’t require a credit check, income verification, or home appraisal, making it a quicker and simpler process.Keep Your Current Interest Rate: If you have a favorable interest rate on your current loan, recasting allows you to maintain it while still lowering your payments.Drawbacks of Mortgage RecastingRequires a Lump Sum: Not everyone has the cash on hand to make a significant lump sum payment, which can make recasting inaccessible for some homeowners.Doesn’t Shorten Loan Term: While your monthly payments are lower, recasting doesn’t reduce the length of your loan.

I knew there were some HML lenders that did OO, but OP credit score “isn’t great” (which likely means it’s poor) and “technically don’t make much money” (which likely means he has little income).i think it is long shot any HML that does OO will take on this risk for what they can legally charge for OO loan.  

I think they used to go up to like 80-85% CLTV depending on credit score.

Also are you doing credit checks through them?

So you can scale that if you want.FHA is for people with poor credit and very little down payment.