The problem would be trying to cover closing costs, having a verifiable W-2 income so that you can qualify, and your bank might want reserves in place (around 3 months worth of mortgage) which would go well above the 4% put all together.

You will need to make sure you have plenty of reserves before jumping in.

However, confirming with your assessor is the only way to determine what is legal and how it should be reported on the appraisal.

They will give you a quick 1. preaproval or 2. denial (hopefully #1:-) based on your oral facts like your credit score, debt to income ratio, job stability, years at this job, reserves.

I have no problem draining my reserves for a flip as I know I could borrow on credit card short term if I needed cash and will be out of the flip in a few months.But starting out, just set aside a reserve in a bank account.

I'm glad to see confirmation that sticking to higher move-in requirements is a smart policy to follow.

If considering this community, have reserves set aside.  

They capture uncertainty around purchase price, the rehab costs, the rental cash flow (above), and the refinancing.To get complicated, you can use Bernoulli variables to model the likelihood of a binary result (if a tenant will leave in a specific year, if the zoning board will approve a particular project etc) and account for that in the cost.I mentioned above that I don’t model the SEQUENCE of major repair events and whether that major roof repair will happen in a given year (but you can using Bernoulli variables if you wanted)… Instead I account for that next major roof repair by setting aside reserves and maintenance funds.

If you have a small cash reserve single family is a good way to get your toes wet. 

Down payment + Reserves?