Once you get beyond 5, some lenders will take a pass (which lenders varies from time to time according to the needs of their portfolios and their appetite for risk).  

Suppression of expenses could mean more deferred maintenance.  

Outline a thorough comp report that will detail the rent difference between both products, and run a simple profit analysis to see what makes more sense for you based on your budget and risk appetite. 

Similarly, we will continue to accept multifamily loan applications but will only fund these loans on a case-by-case basis as the market appetite for these loans is changing too rapidly to have any stable guideline changes.

There is only the best for you right now given your risk appetite desire to be active or passive.

And yes, perceived risk is a huge factor.But also, if the appetite for purchasing securitized HELOC debt just isn't there, then most lenders can't lend even if there's ZERO perceived risk.

Most of these folks, unless they have a major change in mindset, aren't likely to have much appetite for or interest in real estate investing.

Your credit union has their specific guidelines that they choose to operate with and that is based on their appetite for risk.The base underwriting criteria for all conventional loans comes from Fannie Mae and Freddie Mac. 

I'm not sure if there's an alternative, but I'm working on creating a home in CT and there is NO requirement to install a fire suppression system, but I'm doing it anyway. 

Ended up costing around $70k to upgrade fire suppression system, fire alarm, new drawings/calcs, drywall work, etc.