I’ve recently been thinking about renting out my current primary home (built & moved in 2019: value $550K: have a mortgage loan of 2.65%) and buying a new primary home (built in 2020: value $700K: thinking 20% down +80% loan to purchase) in the same area.

Absolutely the first stop in your series of questions would be to ask your tax advisor for advice specific to your situation. 

The surviving spouse (not on the lien) tried to file a claim for the fire, but was denied and settlement (complex situation). 

@Trey Campagna without knowing much about your situation I'd say the first thing to do is to use a VA loan to buy a primary residence with as little money down as possible and the lowest interest rate available.

You can use credit cards or an unsecured loan.  

Hey Corey,Here are some pros and cons of your optionsSeller Financing + Separate Renovation LoanPros:Low Down Payment & Interest Rate: This could significantly reduce your initial cash outlay and make monthly payments more manageable.Cons:Financing Rehab: You might consider a personal loan or a home equity line of credit (HELOC), though these often come with higher interest rates.

Your PMA may explain what authority they may have in these types of situations.

You need to vet them for what they are bringing to the table (cash/project management experience/contractors/etc.)A good hard money company that can work with investors on the loan and/or construction costs.

Am I liable for this situation? 

The difference between interest rates on a conventional loan and a DSCR loan can be significant and cut into your cash flow.