Then I settled in for the long task of really reigning in my budget, improving my credit score, and paying off debt.  

I am a college student, debt free, with 10k in the bank.

I also I want to ensure that the money I make from my first flip, goes into another property that I can 1) live in and 2) pay my debt down and 3) utilize Airbnb to pay down the mortgage faster. 

She does not want to get in trouble by section 8 and I want to do this a legal way.

We have about 25k left in debt (down from 103k.)Being an FHA we have PMI which is $120 a month.

Much like what @Julia Bykhovskaia mentioned except you would share in the equity instead of them just providing the debt.  

What is the building zoned for.. this will let you know what you can legally consider to put in it.

I was trying with one lender who said they can do the cash out at the beginning, but then after reviewing my 2016 tax return, which claim a loss on a K-1, they said they can not due to the debt to income ratio would not qualify (comes to negative..).

Seemed to me that there may be legal issues with doing this, not to mention it just seems very unethical, and outrageous that someone would be willing to agree to a deal like that anyways on a $20-30k house.Any ideas on that strategy or how that would work?

Also, be out from under law and medical school debt in a year?!?