You also cannot use a second mortgage (from HML/private lender) for a 2-4 unit non owner property. 

Here are a few strategies to consider for funding a down payment:Partnering: Like Gregory mentioned, finding a partner who can contribute to the down payment in exchange for equity or a profit share is a solid option.HELOC or Cash-Out Refi: If you have equity in your home or another property, a home equity line of credit (HELOC) or cash-out refinance can provide the funds you need.Private Money: Reach out to friends, family, or private investors who may be interested in lending you the down payment with a promissory note.Seller Second: In some cases, the seller might agree to finance a portion of the down payment as a second mortgage.Live Frugally and Save: It takes time, but reducing expenses and setting aside funds from your income is a tried-and-true method.The right approach depends on your situation and deal structure, but a mix of creativity and resourcefulness can go a long way.

(yes, some of the Non-QM lenders that do DSCR have FDIC-insured deposits BUT the large, private lenders that have thrived in DSCR over the last few years are not FDIC-insured lenders). 

For a truly passive experience you'd probably need to be an investor in private equity deals or be a silent partner on a project.

--------------------------------------I don't think it prevents you as an owner from initiating the action.Personally, I wouldn't have any moratoriums on private transactions.  

Getting a loan to payoff another loan with a lower interest rate doesn't make any sense. we do private lending and can get double digits returns consistently.

And as far as legal—an attorney becomes essential once you're ready to finalize terms with either an HML or private lender to make sure everything’s secure.Hope this helps!

Some private lenders will step in and fund.

This is in a town that has a very good Private College - Baylor University.

Since you are doing new construction I would suggest making them private enough where guest have minimal interaction with each other.