All the same rules of a standard DSCR cash-out refinance would still apply.

This area of banking could do with some standards. 

The requirement is that the house meet habitability standards, and building code standards say a house must be pest free to be habitable.

Regular Inspections: Conduct frequent site visits to monitor progress and ensure quality standards are met.

If you buy primary you only exclude $750k loan interest if you itemize deductions instead of taking standard.

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.

Washer and dryer is different because they are pretty standard.

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? 

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.