I also had a young deeply religious family where the husband worked and the wife stayed home and home schooled the children in their faith. 

I am a landlord in MA and recently had tenants move out and cause damages to my property (soot all over the walls + holes which required extensive cleaning, patching and re-painting).I did have a security deposit, but unfortunately, I was not aware of the very specific security deposit laws in MA. 

My third thought was how this conversation would go.I'd like to think that the skills I have would be useful in real estate, but at the same time, getting a Ph.D. made me vividly aware of how little I know about the world. 

My guess is that the lender that outlined this program and terms assumes its to be " owner occupied " and  that the terms would be much different if they were aware its actually for a  rental  scenario

I'd stay away from 35805 if you do not know Huntsville well or do not have a strong team here helping you. 

I learned how to stay within a budget how to select the right finishes for the price point of the house and how to pre-market it when neighbors walk by and stop to talk and every time you're at Home Depot which was right around the corner.

traffic, noise.....I stay away from it...

He moved from one site where he stayed for a few months, then to my other site. 

Is it better to do a small increase and increase my chances of them staying?

The money you put into a house that is bleeding, isn't lost unless you stay with that house.