Do I go with the boutique that has way lower fees but also way lower production, or do I go with the big firm with high fees and higher production?

They may be lower in your area, but make sure to calculate them properly especially when putting that much capital behind a project.

.- The bank will use the lower of the appraisal or purchase price for their loan. 

@Elaine Lai As others have said, your down payment/equity is much lower than almost all banks will require (generally require 20-25% of total costs (land, hard & soft construction costs). 

According to him to lower the interest to 4.5.

I don't know the area but $1,700 a month for a $125k house seems off, and if you are in PA I believe that your property taxes are fairly high 2%+Also expect to pay points either way with a HML or conventional lender, the interest rate for conventional will be significantly lower.

I will be acquiring the property as a primary residence so hopefully I can find someone with a reasonable LTV and lower down payment.

We purchased a 4-unit in the Lakeview/Lower West Side area last July and moved into the one vacant apartment while retaining the tenants in the other 3 units.

Your rents may be higher or lower than surrounding units, which should tell you something.  

A substantially lower entry point compared to buying a property and you'll get hands on experience in evaluating properties.