However, if I were your partner, investor, or banker, I'd be concerned that you are wanting to take too much risk on your first commercial deal.

First, you banker is right as to conventional/govt. loans.

You need to get out and talk to bankers. 

If its customs the buyers get a construction loan,  if its a tract home/ or spec home I can see where he might want some helps with funds, but he owns a sub division already he should a banker already he works with.I should say pre solds, can the buyers make changes?

A good local banker is a valuable asset in this biz.

Banker doesn’t know you.  

I know i would love to figure this out, just another way to annoy my banker with the fact that he isnt making money off me :) Justin did you have any luck with this yet?

The key is to not trust a teller and to actually speak with a banker and get things in writing.

My bank said there would be no due-on-sale clause.As for insurance, one agency said I could still use my regular home policy (just need to change the name to my LLC), the other said I would need to get a commercial loan (which is twice as much).I used an attorney to write the LLC, and he has a good relationship to my banker.

While each component part is not overly hard to understand, there's a ton of steps, and each step has risk embedded in it AND you are dealing with people all along the way: brokers, land sellers, planners, politicians, bankers, construction folks, renters, property managers, and buyers.