Another problem I have is the 3/2/1 prepayment penalty. 

Many lenders generally have a 1-year lookback window where things will change as soon as its been 12 full months without a mortgage late (then will essentially no longer be a penalty besides any effect on FICO score)

What are the penalties?

Be careful that you don't incur penalties for terminating with the current PM.Remember: cheaper doesn't mean you'll make more money.Start by going to www.narpm.org to search their directory of managers.

30Y fixed DSCR loan with a little to no prepayment penalty would be your best option.

@Tim MelinPro - didn't take into consideration personal income or debt.Con - stiff prepayment penalties that are typically a 5-yr step down and the rates have gone up considerably in the last two months making them a poor option at the moment if you believe rates will go down in the next year or two.

Yes, seems reasonable.James, it would be a disaster if after work and certification, I were to take penalties from the city. 

Ask for no prepayment penalty in case you entitle it sooner than the three years and want to get a construction loan. 

You mentioned $25,000, but you’ll need to spread that over multiple years unless you're using other strategies.Five-Year Rule: The converted amount will need to stay in the Roth for five years before you can withdraw it without penalty.

Depends on LTV, FICO, DSCR, and prepayment penalty, however.