Here are highlights of the program right from their website:Program Benefits-A 30-year fixed interest rate mortgage loan, several rates and loan options available-Down payment assistance (DPA) 3% to 5% of the loan amount-You do not have to be a first-time homebuyer-DPA provided as a grant (never needs to be repaid) or 3-year deferred forgivable second lien loan-Available statewide through a network of participating lenders.

As you mentioned, you can go the DST route, and options may depend on the amount of debt you have on these properties.

If he doesn't submit his proof of claim in the bankruptcy, he stands to lose the entire amount he lent, less the amount he was re-paid.  

But the IRS says, NO - the first dollar you take out or any amount you reduce your debt by is gonna be profit first. 

You want to invest just to have a place to live and potentially offsetting your mortgage payment by renting out the vacated rooms or having x amount of cashflow in the future?

Purchase price: $116,000 Cash invested: $25,000 Personal home that will become a rental once fixed and updated or will be used for HELOC to purchase other properties on/off market at that time.

not to worry, can the other two comfortably cover the lease amount?

Is there other loans I can apply for that will be for a larger amount? 

Small markets with a good amount of cash transactions.

Trying to get started in the fix & flip space, anybody shopping deals around let me know!