Based on my 20 years in Tampa, I'd strongly recommend considering it.

For pre screening are you simply looking at income, debts, employment etc? 

Guess who the E & O carrier's claims department goes after for reimbursement based on the broad indemnity language quoted in this chain?

YES, CMHA may pay 100% or a % from the tenant based on their income.

However, it may lead to higher monthly payments and increased debt.

So there are a few ways to look at this, the 1st question is are you sure your renovation’s will double the property value, most renovations on primary residences, your lucky to get 60-70% of the dollar cost back out upon sale, so really nail down your comps, than you have basically a math problem if your rate on your primary goes up how long if ever before that extra payment is more than 400k in taxes, that’s just a simple calculation to help you decide, but I suspect you actually have a different question here, from a purely financial perspective my guess is the best option is to do anything to avoid that tax hit, but one of the reasons to make money is to spend it on things that you enjoy, based on your overall financial picture and a subjective view of how much enjoyment you will get out of a renovated home, you should decide if you want to roll your profit into another deal or “cash-out” your winnings, I love cars and I’m willing to spend more than is fiscally smart on them because they bring me joy, there is nothing wrong with that, but i don’t think it’s a fiscally smart choice, without knowing your exact property id imagine a renovation would fall into that category, so that’s the terms I would use to decide.

Does your opinion change based on that? 

Trust your instincts, gather as much information as possible, and make informed decisions based on the current market conditions.

The most advantageous way to raise capital for you would be debt.

The loan is based on the income of the property for qualifying purposes (in addition to credit score) versus your personal income.