Saving right now i wont be able to get a traditional loan because requirements i've been working on my score A LOT last year or so up to about high 6's 690-700 self employed about 1 year and 1/2 w2 just for one year of course that is a problem but i'm trying and will pull through if have any advice i'm open to hearing!

A 203K is a great way to do a flip on a primary residents!

Wife and kids will be primary residents in the rental unit, but the wife currently has no income.

There are small private law offices in urban areas of Los Angeles whose primary source of income is taking 40% of the cut on 'cash for keys'  money from tenants who don't pay their rent.

(The potential UDFI tax can be mitigated with all the traditional real estate tax write-offs; mortgage interest, depreciation, etc.) 

Traditionally banks loan on appraised or purchase, whichever is lower...you may be describing a hard money lender...that's a different ballgame altogether...It's impossible (in 99.999%) of all real estate acquisitions to use financing and acquire a property with no money out of pocket...best you could do is HML if you're flipping this...you may scrape by with points and fees...If you're using HML you will have to sell the property or settle the debt with a re-finance...re-fi's are typically 70% LTV...and completely dependent upon your personal financial situation, DTI...easy to get burned if you don't have capacity or the value is not there...and this is an expensive asset.A conventional lender can't lend if seller financing is involved...lending constraints...

I know they sound similar but trust me, using Line of Credit will get you to the commercial department and HELOC is for residential homes (meaning your primary home).   

We need to secure financing, and have talked to several lenders with varying options from ARMs to conventional mortgages. we've purchased several homes as primary residences, but this is our first investment property and I want to make sure we're not screwing up here.One loan we got a quote on was a 10 year balloon, 5 year fixed, with an adjustment after 5 years and then locked in again until year 10.

Also, the unit is my primary residence, and it's in Oakland, CA if that has any bearing on the situation.Thanks for any insights!

It needs a rehab before it can have traditional financing, so I prefer to sell it as is.