4 x your gross income is pushing it, and you may not have money left over for other fun stuff in life.
You need to make about 115K / year to comfortably afford this 350K condo. I would wait to buy, prices are declining.
Sounds like you know how much you can qualify for and that should be what you can afford. So I will answer the other questions. That $7,500 incentive is an interest free loan that will be paid back. $10K down is not too much in todays market, Also there is the issue of closing costs and prepaids and lets not forget condo association fees. I recommend you check at least 3 local lenders to verify you are getting the best rate and terms, Not just the interest rate but the real cost of the loan. Good Luck. Benny