@Quandra Adams - your lender is correct and somewhat incorrect at the same time.  203k's allow for any renovation related fees- such as the HUD consultants work write-up ($400-$1000), draw inspections (up to $350 per and max of 5), title bring downs (typically about $100 per), architect (if your using one), engineering (if applicable), etc are allowed to be financed into your renovation budget. 

Is this sort of arrangement typical?

Typically, you'd need 20% down, but I've seen it where you can go as little as 10% down. 

The numbers typically do not lie.

If they have it the city will tell you the worst soil type and the structure will just have to adhere to those regulations.

From my experience: Typically, one thing to look for in true masonry built houses are the header bricks.

@Surendra Chawla What you describe is possible in areas that the typical Intel worker will commute from.

It happens all the time for multiple reasons.I’d say a typical tenant stays 2 years in a house and maybe 1-2 in an apartment, depending on class

They are also typically shorter termed - like 5/1 and 7/1 ARMs.

Long terms on commercial properties (5+ units) that are stabilized (typically > 85% occupied ) tend to be based on the property itself, not your personal guarantee.