I utilize a room by room style rental as I am able to squeeze significantly more rental income out of the property than if I rented it as a SFH.

I was interested in the "boarding style" (renting out each of the individual rooms) as it seems it could bring in much higher month to month rents.

It's a 3 BR, 2 bath ranch style with only a crawlspace.

In case the color/style gets discontinued.And do you keep the extra at the property?

By having the refinance/Return of Capital event in the same year as the first Distributable Cash, it should make no difference if this is European or American style waterfall.Let's look at this from two perspectives.

We both came in with 665 and 680 and have 10% available.At this point we are out $1000 on non-refundable services, possibly will be out of the earnest money, will be out of $2300 more for the lease termination at the apartment which we also will need to move out since it has been rented anticipating our exit in May.Overall this seems extremely deceptive to explain minimum requirement prior to applying (would never have applied if we didn’t qualify), being approved, only to be bait and switch style roped into paying money we do not have to move in or essentially choose to be homeless (obviously we would just rent another place but it’s an extremely short notice move and apartments aren’t that plentiful)Any advice on where to go from here?

Both styles of financing do require usually 20-30% down, unless you bond well with your seller, and they prefer you put 0% down...

If there is a record of him actually kicking you out because of orientation, as opposed to you saying he did that, it probably won't help him in either case but...gotta know your judge.Leaving aside any trump card of the law, it would probably depend on who came across as more reasonable and believable in court, was respectful to the judge, didn't interrupt the other party and actually presented a coherent timeline and evidence.

Is it important to have professional realtor style headshots? 

You are an engineer, so you are probably a systems oriented guy.