Under ideal conditions, I would use the FHA loan to put down as little as possible, to minimize opportunity cost and capital gains taxes. PMI seems worth it vs. those two costs.
You could potentially put down less with a conventional loan (3% assuming a good credit score). FHA loans don't have PMI, they have FHA mortgage insurance, if you qualify for a conventional loan, I'd go that route as FHA mortgage insurance is stickier than PMI.
Offers below 20% down, whether FHA or not, are more likely to be rejected as well. So putting down less than 20% makes finding a suitable property harder than it already is.
I've never been asked by a seller to disclose the size of my down payment (I've purchased multiple properties with 5% down), but financed vs cash is a common item to disclose up front. If you have solid credit and adequate income/liquid assets you should be able to get a letter from a lender indicating you've been pre-qualified or pre-approved for financing.
Paying 20% down on the largest house I qualified for would require selling 74% of my liquid assets as of today, which are currently in stocks in my brokerage account.
IMO that sounds like too much house, but this piece is truly a matter of opinion. Borrowing near the maximum someone will lend you means that if you move you'd have a harder time buying a new place and keeping the old as a rental unless your income increases significantly or you happen upon extra money and pay down your debt significantly. You also don't know if you will like being a landlord, passive income sounds nice but plenty of small time landlords lose money (even easier to lose money when dealing with remote management).
Personally, I'm not excited about buying more properties right now. I could very well be wrong and the housing market might march ever upward, but I'm also comfortable and not renting. If I were renting and looking to buy a place right now, I'd buy the cheapest place I'm comfortable living in for a while (preferably a townhouse/condo) and plan to turn it into a rental later. I'd probably put 5-10% down.