The problem is that most banks will not approve this condo for a conventional or any kind of home loan as 70% of the units in the building are commercial (for offices) making it a non-conforming property.

To make the unit conforming, we’d have to dig 6 inches deep and also add a stairwell to the front, and to use the 203K loan, we have to bring the property up to code.

Then again, I can't get a traditional conforming residential loan either.

It is for any Fannie/Freddie conforming loan - which is about 90% of all residential loans.  

I agree with Nathan,Properties should conform with the market the property is in, no more no less.In my experience i deliver a good, functional, clean and livable product and haven't had any problems.However, like i learn in my days as a car dealer...

There are conventional and conforming loans that can get the job done depending on employment and credit profile.

Some states may not recognize or fully conform to the federal provisions.

Adding an egress window to a non conforming bedroom to make it a legal bedroom for example. 

@Louie Masters - I just got a 2/1 with 2 more non conforming in the basement for 83k right next to the college.

I believe they (conforming loan underwriting guidelines) use 75% of gross rents to offset mortgage payments on rentals.