@Tram AmbersWelcome to the site.Owner occupied multi family is a great way to get started but does have it's negatives.I would make sure you took your time and only placed someone who would normally qualify as a tenant but also someone who you could get along with.

But that doesn't mean that it will qualify for the FHA-203B program.

My debt to income ratio isn't good enough to to get me qualified for an additional rental property (I already have one property).  

I do not find this to be a big deal (neither do my qualified tenants) and always prefer to collect a security deposit.  

Keep reading and learning, you may find that your rent-to own plan is a great one, or you may find that you can actually qualify for an owner-occupied mortgage after all. 

So if I remove these would it then qualify? 

My advice is not to go out looking to qualify to an investor.  

If you think that the agent told the seller to try to get out of the contract so she could list it I would put in a formal complaint.If you want the deal I would (or have your attorney) get in touch with her Broker and inform him/her that you already have a contract on the property and this agent relisted it and presumably has a new buyer for it.  

Repairs are being budgeted at $150 a monthAfter adjusting the numbers to remove water and a property manager and assuming a rent of $950 I am getting a cash on cash ROI of 10% and a cap rate of 8.7% and it just barely qualifies for the 1% rule.

The current owner didn't use a formal walk through check list, but said he looked for clean when tenants vacated.