What is the normal or recommended way to document the loan so that both the lender and the lendee (me) are covered? 

I've been trying to find creative ways to finance a deal that I am analyzing and haven't been able to find an answer to this question: Can I use a HML to cover the rehab. costs of a flip and down payment on a house, while taking out a traditional mortgage on the property?

Sit down with you insurance agent and go over everything in detail to make sure you're covered.  

Especially if you're doing any of the work yourself, it can and will take longer and require more money than anticipated. 3)- Take your time screening tenants.

I am also going the route of purchasing personally and obtaining umbrella insurance to cover my investment and personal assets/liabilities.

And all of it covered in peeling varnish. 

I've got you covered in New York City!

We have 2 deals that we are planning on closing in the next week, but our HML is only covering 80% of the purchase price on both properties.

Not an insurance agent but i believe the difference is, the Vacant policy covers the existing structure plus improvements as they are done. the builders risk insures the material and i believe aspects of the project as it is built, since there is no structure. so if you happen to take a builders risk and you are doing reno, it may not cover you for the existing structure .

House hacking seems particularly useful for FHA-approved LOW DEPOSIT owner-occupied loans, because you can buy up to a four-plex, aimed to 100%+ cover your mortgage repayments!