So about 1,100-1200 monthly expenses after groceries and other miscellaneous things I’d say.

I know it's talked about all the time, but I recommend people leave their equity and focus on increasing income, cutting expenses, and saving for the next investment.

Since the interest rates are lower, try the VA Interest Rate Reduction Refinance Loan (VA IRRRL).

There are several companies out there that have catered specifically to the "lower commission structure" , like Redfin.

It would be a good project for a custom builder, but I would think that the guys who are building big expensive houses would probably just want to buy the lot outright to keep more of the profit (understandably so). 

So essentially my decision is between a large bank with a lower max interest rate, or a smaller bank with a higher max interest rate.

If you know you can't or don't want to deal with people then factor in a property manager for expenses.

It can be without expenses for simplicity sake.

How are the major potential expenses of the house looking (AC, Roof, Plumbing, Electric)?

If you’re one of the last buyers, your risk will be lower but you’ll pay more.