I made the last rent payment after she passed away.

A lot more stressful when you have a vacancy and you still have to make mortgage payments....sometimes it plays on our emotions and doesn't allow us to make good decisions on tenants and other things.Good luck!

If I can take a new FHA loan, will I only need to put down 3.5% to buy the new home (I would use the home equity loan for down payment)?

The goal is to add me to the title, I start making payments on the property for six months (seasoning period). 

If they miss rent payments what do you do?  

We will be putting 20% down, monthly payment will be $3,000/mo and the remainder paid at the end of 5 years. 

Details:Price: $65,000Cash available for down payment: up to $20,000Zoning: ResidentialPlans: hold it with plans to potentially build on it within the next 5 years.Additional info: lot is currently located between two duplexes.Any advice would be greatly appreciated.

There are some lenders who lend money with 20% -25% down payment.

I think this would serve me well as I will not have a large amount of cash for a down payment and would be using an FHA loan to finance this first deal. 

You should still do credit and eviction check.The 3 X rule is for the average person with car payments, credit cards, etc.