Those typically let you borrow up to 70% of ARV.  

I spoke with one bank that did rentals but they had a restriction of allowing 2 loans per borrower when the property is a rental.  

Alternatively, you could take the deal your FIL is providing but a couple of things to consider: - at that point your relationship will change to lender & borrower & - your income should ideally also be increasing over the years (this is to counter your point about feeling like your timeline is pushed back to purchase your own forever home). 

Next search out the best deal, have some of us here on BP analyze it with you based on your goals and skill set. then Pull the pin. its quite simple. i would say the most important thing is to get your money figured out, how much you want to spend, how much you have to spend, and if your borrowing, from who, and what the best terms are. one of the best exercises i do is prepare a "Personal Financial Statement" it helps you understand your Net Worth, its kinda like your report card for a banker, it shows how responsible you are with money, regardless of your income.  

Banks will consider the size of the loan, the location, property condition, cash flow, borrower financial strength, experience, leverage and various other factors as part of their consideration. 

I am borrowing 5,000 and paying 1,000 a month until I pay of.

@Kori Kelly, paying off debt to borrow it back at today's higher interest rates through a heloc doesn't make sense to me.

@Colin Caporal- mentioning your plan for  renters  wont make any difference  so  best to not mention it  ....rates  have  indeed  increased  making many borrowers  revise the  purchase price  that they  can buy .....you mention that some lenders  have  told you  400K ...is that the lender you are  working with ? 

If you have a high DTI you shouldn't be borrowing more money.

The amount of cash and commitment borrower had invested into this property.How did you find this deal and how did you negotiate it?