Weird Property- Zone Residential but looks Commercial- no go

[Ray Harp]

Hi-

Thanks in advance- need some advise

We are looking to buy a property that is zoned residential 2 dwelling but the banks wont lend on it because it looks "too commercial". It kind of looks like a cinderblock construction with a old house attached. This will be our primary residence. IT never had an appraisal because the bank stopped it even before if could be completed. Is there a way to get a new appraisal finished and convince a new lender of the worthiness of this property? 

 Our agent thinks we should try a Hard Money loan- 

This building is in Colorado Springs and the market is very hot- we really love this house/building thing. Its great for us and we are wondering how risky the HML really is. For what it matters, we have 800+ credit scores, income over 120k, 20% down- its not so much the loan as getting the house accepted by a mortgage lenders.

Any ideas. Pros and Cons of the HML- should we just walk away?? CS market sucks right now/ maybe not even worth it but have to live in the area for family health reasons.