Need advice: Investment plans

[TM]

Hello,
Been a lurker and steady MMM reader for about 6 months now. My wife and I have taken on the mustachian mindset of spending less on Stuff and are trying to be more investment minded in regards to ER.
We have four kids and lived in a house that was paid for, but we didn't have anything in savings for emergencies and only a little bit in 401k.
My salary basically covered expenses with about a few hundred left over to put in the bank. We have NO DEBT.
I now make 55k gross. I net about 37k after taxes and maxing out employer match on 401k. I also receive almost everything I am taxed during the year back when tax refunds come.
We are looking to start a business to bring in more money in order to save/invest more.
We have sold our house(130k) and are going to use the money to:
1. fund an emergency fund @ 25K I will contribute $100/monthly
2. Start a business with about 50K
3. Put a down payment on a house at 40K(we decided not to do a heloc because the 15yr payments were too high based on what we would estimate making for the business)
4. Put anything left over into investments like index funds or other forms

The business can pull in conservatively 800/mo
We are wanting to store that up to build the business in order to bring in more cash flow. (we would do this for the first two-three years, then invest in various index funds and retirement funds when we are making an extra 1200-1600/month)

We have a house we are under contract on for 130k. We can do a dp of 30%(40K) for a payment of $450 @ 4.375 30yr term

Here's my main question.
Should I put more down for a lesser payment yet have less money to invest/start a business?
We can make the payment with my salary alone, but we would NOT be able to put money into "car replacement" funds and "Major home repair" funds etc.

Here's what my outlay looks like with the house.
first 25k of cash goes in emergency fund so the rest will be for investments/business
Options(these are rounded percentages and dp's for ease of reading)
30% down(40k) payment of $450: 90k left over - emergency fund=65k
35% down(45k) payment of $425: 85k left over - emergency fund=60k
40% down(50k) payment of $400: 80k left over - emergency fund=55k
45% down(60K) payment of $350: 70k left over - emergency fund=45k

Should I stay super conservative or be a little more risky considering I will now have an emergency fund that I'm contributing to.
any advice is appreciated.
BTW I know some of you will say buy a cheaper house and we have tried. This will be our fourth time under contract. We have backed out several times for various reasons. I say this because we "could" rent(900-1000/mo), but we would be in the same situation as far as monthly budget goes.
Thanks in advance. sorry for the super long post...

[willn]

All of those are good options, I wonder why, with a paid for house, you only had a few hundred to put in the bank when you were bringing home 3K a month?

I assume the biz income will be in addition to your salary.

E fund sounds like an appropriate amount.  No need for the extra 1200/year.  Put that in a Roth or add to your 401k percentages.

Decrease your payroll withholding so you don't get a refund, now that you are mustachian you can put that money to work.

I'd say use the 35 or 40% down options, give your business a bit extra, most things in live cost more and take longer, or use it to max not just the match but increase the overall amount into 401k savings.  Or Roth. 

I also wouldn't say get a cheaper house. As long as you aren't buying the most expensive one on the block, and other fundementals look good, it's within a reasonable budget. 

[TM]

yea we sold the house and in the midst of that I got a significant raise so that really helps where we are now(currently short term lease in apartment.
Thanks for the feedback.
I forgot to mention my wife stays home with the kids so it's only my income w/ 6 of us.

The business would be in addition to my salary.
Thanks
TM