You can fight who you want, that program for 2-4 unit properties more or less is gone.Get an extension, flip it to FHA, and close if you can.Here in the SF Bay Area, I've encountered several "Hey Chris but Joe at XYZ Home Finance said they can do 5% down on a $700k Oakland duplex, conventional!!!"

Chris, while you're right that with another tenant you won't really know for sure what you're getting until they're in, I would argue that the same is true in option 2, with your MIL staying and renting alongside 2 new strangers.

I had similar results as Chris above.  

@Chris B.

Hello Chris,This has always been a fear.  

@Chris Mason that’s a great point I didn’t think of that.

@Chris Seveney thanks.

Originally posted by @Chris Mason:Who the F told you to skip your July 1 payment for a refi expected to close in late July????!!!!

@Chris Mason i like this explanation a lot, thanks for providing it.

@Chris Whynder as long as you meet the bank’s lending requirements, yes.