Most peoples biggest "out" is if they are unable to get approved for the loan than they may be able to backout without penalty depending on the loan period written in the contract.Like everyone else said, it will really depend on the contract wording.

We then wholesale it to me, I get a mortgage (I've been pre approved by several companies for 500k) for 400k and take possession as my primary residence, pay back the hard loan, (350 all in for 9 months) and split the difference.

Quote from @Michael Chalke: Unfortunately, Section 8 increases must be approved by HUD.

I was able to get approved for a loan but need to bring $25K to the table which I do not have.

If your property qualifies for a higher amount, the housing authority will let you know what they can approve.

If you have the POF to close on it all cash, you should be able to finance it with a hard money loan and give confidence to the seller that if the loan does not get approved you can still buy it with your own funds. 

They will be able to guide you in the right direction and tell you if your project is feasible or not.From there, we hire outside consultants to take the plan through the approval process.

Having all your financials, documentation, and pre-approvals in place allows you to act quickly when an opportunity arises.

However I found that many buildings also had restrictions on MTR such as limiting number of units that can be rented in the building or even requiring HOA Board approval of potential renters.    

If you're already pre-approved, I would recommend verifying that your lender can service a non-warrantable condo and is keeping the loan in-house.It's completely normal to second-guess a decision like this—there's always some speculation involved.