If the seller refuses and no negotiated settlement can be reached, under the standard inspection clause the buyer can back out the deal.

Lending standards are tighening.

Everything should be sealed (sometime a clear coat seal is used, so I can't really tell if it has been sealed or not), but our standard is that everything that has "alligatoring" (the heat damage that has the ridges like the back of an alligator) comes out. 

Yes you can connect a standard wireless router to a modem via a ethernet cable.

Switching at occupancy to a standard policy 2.

Do you think that is a limitation of their lending program, or is that something that is the post COVID standard?

Depending on your scope you may not need a permit; however, the City also has a streamlined "Easy Permit" process for pull & replace projects, in addition to the standard permit process which would be needed for additions or significant interior remodels where you are completely re-configuring rooms or adding bathrooms, etc.

Due to this we are unable to qualify for a large enough mortgage.Question 1: is this pretty standard across the industry or should we keep looking and see if other banks would consider this rental income as income?

You may want to just get some standard comps ran so you have a general idea of ARV.

Any advice on what is standard to expect.