If you buy it and stay two years and sell I think you will make more ROI. 

Also, the funding fee is actually more expensive than mortgage insurance unless you plan to stay long-term.  

I am a stay-at-home mom of an almost three-year-old and almost one-year-old.

If you're staying on the residential end of things, I would suggest contact your personal insurance carrier to start. 

I'm worried that during that because of that rehab period, my DC property could be considered my primary residence since I have a mortgage, and given the fact that I don't currently help pay my parents mortgage through rent and therefore can't validate me staying there.

If they stay until December, then you have collected $600 extra.

There is a double-wide trailer on the property as well which rents for 550 and is currently occupied, same tenant would like to stay when property is sold. 

I cant find anyone in my network, if they do have funds they rather stay in the market I just don't understand.

Essentially they become an investor in a larger property (multi-family, self storage, etc), receiving a preferred return every month with ZERO action required while still staying exposed to the real estate market.

I will stay in one of the smaller rooms and rent the rest out.