Finance snag on my first deal

Background-

Single Family HUD Home listed at $70,000

1457sqft

ARV $104,000

Repairs: 15k-20k

My bid was accepted for $62,000

ARV $104,000(Low)

My intent is to make the repairs out of pocket. This will be primary residences until I get orders, and then I would cash out refinance and rent it out.

I was pre-approved for a 30 year FHA loan 3.5% down @ 4% interest.

Today the loan officer told me she didn't think the home would pass FHA standards and refered me to another bank. She said after 6 months and once the repairs were made I could refinance with her. The new financing is 6 months interest only @ 5.5%

Question 1: What are the risks associated with this plan?

Question 2: Is there a better way to finance it?

Question 3: If in 6 months this is no longer my primary residence (due to Military PCS) will I still be able to refinance?

Thanks for the help!

JD