If this terms make the loan not viable, either look to structure the deal differently (creative financing, lower purchase price, etc.) or pass. 

What I saw from big lenders online was noticeably lower but I don't know how that impacts FHA lending. 

We thought about lowering the price, but wouldn't a buyer just offer a lower price if that was the issue?

Lower interest rates / lower down payment requirements are just 2 advantages of occupying prop. 

For lower price point properties you can get the same or better monthly net without having to worry about vacancy and turnover costs.

@Simon Lopez most policies can only go to $1M in Personal Injury, hence the need to buy an Umbrella policy.Check around for a lower cost Umbrella as there are options out there with premiums closer to $350-$400 for a handful of homes.

Do you honestly think a violent felony would score lower than an eviction?

Be very sure you have the right market rent, that you are asking them to pay the same as what they move to, or a bit lower. 

I can understand the desire to have a great cash flow and high ROI with no $$ in the deal, but I don't see the point in running your numbers based on that goal, and making a decision based on those number.....especially if your real plan is to put 20-25% down anyway......If you can find a place that cash flows well with zero down.....and isn't a BRRR deal, then that's pretty awesome6.5% ROI isn't "bad" .....its just not great.....there are other OOS places that have the potential to do better....but some of them come with a higher risk (lower class neighborhoods etc).

It's a solid middle to lower income area.