Since a DSCR loan is tailored for investors- this is classified technically as a "business purpose loan" or a "commercial loan" even if the property isn't commercial 5+ doors. 

Just thinking out loud here, but maybe another option is to demo some of the original home in the back so it is under 1300, classify as ADU and build the new primary in front?

@Justin KaneMy banker is classifying a non owner occupied investment property as a commercial loan.

Hey David, In Houston I would classify as follows:Minor repairs - $100-$400 as you won't get someone to the property for less than $75-$100Moderate - $400-$1,000Substantial - over $1,000May I ask what you're using these categories for? 

So that lines up, but the issue is that it shouldn’t be classified as C4 according to the definition in the report 

Remember that, according to FHA and conventional loan guidelines, you should not rent out the entire house within one year if it is classified as your primary residence.

I lived in SIC and went to HS in Ocean City.

However,   if your home is zoned/classified as a duplex (any L zone classification I think)  then you cannot use this exception even if you live on site.   

For newly constructed, purchased or renovated properties and also retroactive generally over the last 10 years, building components are properly classified into individual units of property and accurate recovery periods for computing depreciation deductions.

The only areas I'm finding opportunities are in the lower income (I'm assuming what would be classified as class D).