While the IRS allows this, it is a taxable issue.

Along with this, I plan to house hack my first year and accumulate rental properties as I continue to make money.

If so, that will be an issue, unless there is a specific bank loan that keeps the note in their portfolio and is okay with the condo being non-warrantable.

However, as first-time and inexperienced homebuyers, we overlooked critical issues during the initial inspection.

They are incredibly understaffed and will view this as a civil issue. 

As others have mentioned, if you can commit to using the property solely as an investment and won't occupy it yourself at any point in time, DSCR will allow you get around the DTI/employment/income issues.

If it comes back that there is no issue then the cost will be coming out of your security deposit.

My issue that I’m having trouble getting over is that down payment money is currently yielding 5.5% in an HYSA with no risk or stress.

We are all human and make mistakes.Yes, you will have the same issues when you go to sell it.Good Investing...

That's a nonconforming property, where you have fewer lenders that will bite on it so you are limited there but let's assume that's not an issue.