There are ALWAYS PML/HML looking to deploy capital, and I've heard complaints from many that they don't have enough borrowers..

Upon sending of the notice, the borrower must be given time to cure adding another month.  

@James Palin Unless you're doing buy & hold, your purchase price needs to include the rehab, your fixed (buy & sale) costs and your holding costs, which would include your payments to the HM guy, while you are rehabbing.Example:   100,000 - 10,000 - holding costs - fixed costsIf I assume a 4 month hold and borrowing $70k at 12% and 4 points for the HM guy, my MAO would be more in the $55k range.I'm pretty conservative, but I think it's a reasonable number. 

The borrower owes a total of $170K, correct?  

I have borrowed from friends and family in smallish chunks (20-30k) and done second position liens up to 90% CLTV (so if my current leverage is 70k on a 100k house, I do a note and deed of trust up to 20k). 

What is the FICO score of the borrower?

Then you start rehab and as work is completed, you get additional disbursements to pay vendors....if the bank is smart, it requires lien release/waivers to make sure there are not any partial payments.If you run out funds before the work is complete, you pay the rest out of pocket or try to borrow elsewhere.  

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).