So we are looking at purchasing a home (new primary residence) but we will be leasing back to the current owner for 120-150 days as the current build they are working on is being finished.I was told if I apply for a mortgage and disclose that it will not be my primary residence outside of 60 days from the point of contract that it will require a larger down payment and a higher interest rate.

We didn't disclose anything on the house but everything was redone - Roof/windows/HVAC/the works!

I would suggest making sure you know your local laws.For example: In Washington state you have to disclose your rental criteria in the advertisement.

Notify the seller of any large issues you find so that it must be disclosed to subsequent buyers which could reduce subsequent sell price and would provide some incentive for the seller to meet you somewhere in the middle. 

Its too easy to violate laws by asking inappropriate questions or by not disclosing how you will use the information or by not getting the applicants explicit permission to get background and credit reports.

There has even been a dialogue here about making it mandatory to disclose if a property was previously home to smokers.

Again, I can't publicly disclose but it's gotta be one of if not "the" highest price a PMc ever fetched.

He also did not disclose that he had already 3 days before suspended payments.

This would be 2 days before he announced in his June 20th email (which I believe you have) that he was suspending payments to hundreds of investors because of financial problems.He did not disclose anywhere in the webinar (48 hours before the email) the difficulties that his business was experiencing which was laid out in the email 2 days later.

One of the questions you will be asked on the URLA for any conventional/govt loan is something to the effect of "are you responsible for any debts that are not already disclosed (meaning discussed or on your credit report)?"