You gave a down payment.

I know you can get a low down payment home owners loan on a duplex but you need to be sure it will cash flow with a larger loan (higher payment).

From your post it sounds like a paid collection or a late payment.  

I bought the property from a family member and they gifted me the equity to use as a down payment.

Ashley - I don't know if this is a good deal or not - but I did respond to that listing - it looks bad and empty - There could be lots of equity or lots of stress - I like in and out in a short period of time.In my opinion every property offer is a "deal" - Every property offered is or could be a good deal -The only thing that make a property a bad deal is PRICEEvery property will sell if the price is rightTime on the market and price (reduction) are close cousins -Price softens as time moves on and motivation and reality is realizedEverything will sell at a price -The first thing I'd want to do is get the history of the property - how long on the market, why is it vacant - what's the reason for selling -What is the current mortgage balance - is it current or in the arrears - What other liens or obligations are on the propertyHow many owners - decision makersWhat is the commission - will agent splitAre there open to a reasonable and creative offerDo they want any profit or to just get it out of their nameCan down payment be paid over timeHow much paper with they accept - delayed payments - principal mortgageAshley - since you exposed this property to all of us - You should see if you can get the answers to those questions above - and play the game - WHAT WOULD I OFFER?

That would give me low monthly payments while leaving me plenty of reserves. 

I found a seller who is behind on payments and is willing to sell "subject to" us taking over their conventional loan.

To my disappointment I was denied a loan of $170,000 from quicken due to high debt to income ratio ( I was over excited and failed to do my due diligence) I didn't think to add in the new payment into my calculations.....oops, But with that nice lesson learned I now know what needs to be done in order to get either 50-80k on a heloc. so my question is when the lender calculates the dti on the heloc do they use the interest only payment or principle & interest.

As far as I can tell, the benefits with the 30 year are:Interest is deductibleDue to inflation, the cash that Im using to pay the monthly payment in 20 years won't have the same buying power as the monthly payment does today.  

The benefit is that the payments are taken from your check pre tax which helps and you pay yourself the interest rather than the escrow company.