If you're worried about cashflow, why would you do a 15 year loan with a higher payment -> meaning negative cashflow?

Its great that the seller is will to carry a note in a seller 2nd as well, that will help reduce your require monthly payment with the right lenders.

I've heard there's a good chance the mortgage company won't care as long as the payments continue to be made on time but I still want to protect myself just in case.

THEN, I plan to purchase the second home using a FHA or conventional loan (3%-5% down), for which I will likely pay the monthly cost out-of-pocket, maybe with some rental income support if it is a duplex.My concern is, I do not want to spend my savings or weigh down my debt-to-income ratio so much so that I cannot qualify for and pay the down payment and closing for the lending on the second home.Questions: - With the first home being multi-family, 75% of the rental income (or potential rental income initially) will relatively either maintain or boost my debt-to-income ratio from lenders' perspectives, right? 

So, I'd probably lean towards you staying where you are and look for rentals to buy with the $100k as a down payment.

Key Factors for a Good Seller-Financed DealCash Flow: Rental income should exceed monthly payments (PITI) by at least 1.25–1.5x.Purchase Price: Compare to ARV and market value for fair pricing and equity potential.Interest Rate: Aim for competitive rates; higher rates must still allow positive cash flow.Amortization/Balloon Terms: Favor longer amortization and align balloon payments with your exit strategy.Down Payment: Lower upfront costs reduce risk but should meet the seller's expectations.Flexibility: Seek no prepayment penalties and fair late-payment clauses.Property Condition: Ensure the property’s condition matches terms through inspections.Seller Motivation: Assess the seller’s willingness to negotiate favorable terms.Exit Strategy: Have a clear plan for refinancing or payoff at term end.Portfolio Fit: Ensure the deal aligns with your financial goals and risk tolerance.Vetting multiple deals and consulting professionals is crucial to making sound decisions.

I handle payments by draws and I must always be ahead and work versus payments.

I don’t see where a rental would make sense, so I’m trying to look at other options to cover the monthly payments until the market goes back up.  

There are some great suggestions here on down payment, interest rate, servicing, and underwriting the borrower.  

We've done demos with all of the big name PMS options and are finding big gaps with all of them, mostly when it comes to payment processing.