There are many other loan products available in addition to Creative Financing methods you can learn about that don't look at your DTI and are "asset based".The ideal loan product really just depends on what strategy you're looking to implement, BRRRR, Fix/Flip, Short Term Rentals, etc...HMLs(Hard Money Loans) can be helpful for Acquisition but depending on the price of the property, the fees can eat up much of your profit, especially if there's not much "meat on the bones".

The method by which the estimate is made varies from city to city. 

I'd use the enemy method over Airdna data.Higher interest rates, high property values, increasing STR rules and flat put bans plus oversaturation are things that make this a tougher business.You really have to do your research in identifying an area and a property that will cash flow today with no guarantee it will keep cashflowing in the future.

I would have the current owner provide you proof of deposits for the last two years for the rent receipts (look for steady on time payments as well as consistent amounts.).

Good on you for saving up a substantial down payment so you don't have to go down that road. 

That currently is my plan, I have been trying to figure out though if I am planning on putting some money down, to keep the mortgage payment more reasonable, is using the VA loan still beneficial?

They use different methods to purchase.

Make sure to pay your bills on time and if you have large amounts of bad debt work on the snowball method to pay it down.

If so, can additional funds be brought to the table to fund the new property's down payment?

If you have money for down payments and construction, funding will be fairly easy with a hard money lender (also need a credit score of 620-660 min).