Bank forcing 25% down on primary residence for no reason

Hey BP, I finally have an accepted contract today for a new property for a new primary residence. It is right across the street from where I live now. Both properties are condos. My lender is working with underwriting to see if I can have a smaller down payment or else I may have to label it as an investment property. I’d rather put less money down obviously, but I’m more curious about when the time comes to sell this new property. Would I have to deal with capital gains since it is technically an “investment” property? I’m going to sell were I live now in the next few months, but this controversy seems silly. Maybe I’m thinking too hard about this, it’s been a long week already. Any help would be great. Thanks in advance! Erik