The property has been in excellent condition since it was built two years ago, and I’ve lived there myself without experiencing any similar issues.The lease is a standard Texas lease, and I’m seeking advice on how to approach this situation fairly.

If you do section 8 you also have to be aware that your notice requirements for renewal and also for lease termination are longer than the standard lease.

Is that a national guideline or is that just more local bank conservative standards? 

The disparate impact standard is a wrinkle, but I imagine that will end next year. 

Washer and dryer is different because they are pretty standard.

If you don't provide the information that's fine, but it would be a transparent answer.There are hard money lenders who underwrite to DSCR standards with their own rules, and commercial loans with use DSCR in various  applications. 

Also, I really wanted the units to be up to my standard, but I think I spent more on them making them look better with upgrades, etc, than I needed to.

And by DSCR loan, I'm thinking standard 30-year DSCR loan.

Hard money and standard loans (Conv, DSCR) are unlikely to be available for deals under $75k.

If you have a good insurance broker, you should be able to use a more standard policy though.