It’s similar to increasing the individual policy coverage, but since it’s handled in a way that it’s pretty much a safety blanket, they offer it cheaper.

And sometimes it ends up being an arm wrestle with your accountant.  

A true win-win without any stiff arming. 

FHA also requires the self sufficiency rule which basically means your 1 Mil fourplex would need to rent for nearly 9k a month  or at a .90% Rent to Value/price ratio in order to qualify at the min down payment which is near impossible in Seattle/Bellevue core areas unless you either found an off market unicorn property, its heavily distressed, you up convert a SFR into fourplex or other creative value add strategies.The standard Conventional program will require 25% down payment whether you buy it as an owner occupied or investment property on 3-4 units.If you live in the property there are some "niche" programs for conventional financing that will allow as low as 5% down but the program is being revamped after the end of July this month as to only allow folks with 80% of the area median income(AMI) to utilize it (seattle AMI is roughly 100k so you'd have to make 80k or lessIf you're a Vet or have served in the armed forces you may qualify for VA financing as well (owner occupied only program).Hope that helps.

Fannie will actually back loans that are C5 or C6 (after C6 is teardown, C1 is new construction): "Properties with a Condition Rating of C6 are eligible for sale to Fannie Mae provided any deficiencies that impact the safety, soundness, or structural integrity of the property are repaired"As a consumer you would never know who those bottom feeder lenders are that would lend on a C5/6, since they have completely trash rates (better than non-qm and HML) and are slow (what would that commercial look like?

Hmm...I wonder how it is the first examples seem to be important to all landlords, yet that last one somehow gets a pass from some landlords...maybe because there is a government program designed to act as a safety net in that scenario?

There's also stipulations with arms length transactions that you would likely be crossing. 

I'm definitely inclined to #3 as I got into this venture as a safety net and somewhat stability (otherwise I would just do REITs), but pulling in potentially bad tenants would be contradicting.

It just has to be a “functional” home with utilities and roofs with some life on it and no major “safety” issues.

@Kyle Brown typically I advise my sellers to take care of safety repairs.