Not sure what the correlation is between the septic delay and the bedroom situation, but this certainly is not a pleasant surprise. 

Conventional loans can do a 2-4 unit with 5% down.

Rents are at market level now and I paid off the loan from the proceeds of another house I sold. 

And in my situation, my primary residence was on the same lot as my rental unit and they still were pursuing charges even though I asked my neighbors for permission, ran the property for over a year with no complaints and lived less than 100 ft away.

This situation also affects two of our neighbors who purchased their homes around the same time.

For my unique situation, it has been absolutely WORTH IT! 

What would you guys do in my situation?

Otherwise a typical DSCR loan based on market long term rents should be sufficient to qualify? 

Also, once on title, what are my construction loan options?

Ward, et al. which changes the licensing requirements for parties who are the assignee of a home equity line of credit (“HELOC”).Crux is the state is saying Mortgage Lender License Required for Installment Loans Where Installment Loan is Secured by Residential Property even if you did not originate the loan.