If you find a septic designer in your area, they should be able to tell you if the system is adequate for current usage or whether, if any part needs to be replaced, it would need to be upgraded; then you could speak with a septic installer and get an idea of the cost for all or part of the system.  3) Can you control the behavior of the tenants to protect the system (can you prevent them from flushing personal products down the toilet, or pouring bleach down the drain, or washing paintbrushes in the sink)? 

Are there any restrictions that would prevent me from renting my current residence, if I purchase the new one?

Turning them into higher rate non conventional financing seems unnecessary. 

I am a bit anxious because this is water damage and it looks like black mold is growing, plus I want to prevent further damage and I never dealt with another landlord before. 

While even that strategy usually works in a buyer's favor, it causes unnecessary inconveniences and can slow wealth creation.Holding great properties forever is a powerful wealth builder.If your life situation will permit, house hack.

I don't think your credit will prevent you from getting either FHA or conventional.

I imagine that something in your situation is preventing you from going conventional, because if you have that much down you should look into conventional or perhaps a non-QM mortgage.

Or is this an unnecessary step for someone just getting started?

Tell her what happened and ask how A) they would prevent it from happening, and B) if it happened how they would solve it. 

These are thicker and will fill small gaps and prevent additional damage from water, at least for a while.Rather than put a band-aid on it, you may just consider replacing the deck.