You should plan on 20% down, closing costs, legal etc. and probably another 10K in reserve funds.You should probably spend more time studying finances, real estate and your local area to get a more complete education on investing.

If I tell them for REI they most likely won’t approve.

The property was legally converted from a SFR to a duplex at some point in time.

The fact is your loan will be small and the price differences between lenders are more apparent on larger transactions.The biggest difference between lenders is going to be the actual loan officer and how good of a job they do getting you approved and what products and structure they give you to get this loan and set you up for future investing. 

@Zack Karp I tried to tag you on my phone and it wouldn't let me, so I figured you didn't get the notification.The CU loan officer said even if the loans were excluded, I wouldn't qualify for much more than 75k that was approved for a conventional loan.

If you were in the process of gaining your first property and were approved for a 40K business line of credit, would you buy a SFH (there are tons of under 40K homes in Memphis, TN) or use some of it as a down payment for a SFH, or maybe take a totally different direction? 

Under that same description you will also find lenders that will approve you based on bank cash in flow, if you are self employed, rather than your net income on your tax returns. 

That said, in larger cities, an STR may only be approved in one part of the city and not another (street specific) depending on proximity to a hotel/resort.Obviously lots of due diligence needed.

All goes according to plan my fiancé will have a real estate license by the end of October and I will start my next full time job on Oct, 8th.I am concerned about my eligibility to obtain a loan and would like to know if anybody has advice on how they would go about tweaking numbers by paying down debt and lowering the down payment to lower the Debt to income ratio to get approved or if they think I sound like I’m in a sound position.

Any time a landlord accepts rent payments in exchange for a person to live somewhere, they have created a legally binding lease.