Getting a loan was somewhat challenging due to my W2 income, but I was able to get a lease on my first place to help me qualify.

Main reason to go FHA over conventional is if you are unable to qualify for conventional, as FHA does have more leniency.

It comes down to your comfortability.With 2-4 units, you would qualify for a higher loan amount because they factor in the income from the other units.Whenever I write offers that are not accepted, I always ask for feedback as to why the other offer got accepted.  

The potential tenants are aware that I'm the PM and neighbor.Rent: $1,600Tenant 1: a few years about of school, excellent previous landlord references, two jobs, seemed clean cut and put together, Gross Income to half / full rent: 6.77x Half Rent / 3.3x Full RentVolunteered dad (well qualified cosigner) who agreed to be cosigner and passed all screens.Tenant 2: Similar life status and feel as Tenant 1, lives with parents (no rental history), toured apartment with his mom, Gross Income to half / full rent - 3.6x Half Rent / 1.83x Full Rent.Would you require a cosigner for tenant 2 or is tenant 1's dad enough when combined with both incomes?

This would not be a good deal for me, but that's a very subjective question.2) Objectively you should refi for 30 years, but there are many subjective influences that can make 20 years the best choice for your personal situation.Sorry, this only qualifies your question!

They are flipping and haven't held the property long enough so allow a buyers loan to qualify.

And for those not in the know, in Saint Paul just before this they passed even worse measures saying we couldn't use income or credit score to qualify a tenant.

If you have a qualified tenant, you'll probably be okay.

We do a free application first to pre-qualify the individuals before we have them submit to the paid service, so that they're not wasting their money if they don't qualify for our property in the first place.

Without the appraisal waiver, you are pretty much at their mercy, but I think you would be surprised how often a home qualifies for the aforementioned appraisal waiver.