Brand New iPhone 7 Restore Issue w/ Passcode (Press Home to Upgrade)

So my dad has an iPhone SE with a backup on it. He got a brand new iPhone 7 from Verizon that has not been activated yet. He went through a few of the instructions for setting it up like selecting your language and setting up a passcode. He set up a 6 digit passcode for it. I then continued setting the rest of it up like selecting the backup and restoring it. I was able to unlock the iPhone with the passcode he set up and continued with the instructions on the phone. I was able to select the backup from iCloud and restore it to this phone. But once it was done restoring, it restarted the phone and then a white screen came up and at the bottom said 'Press home to upgrade'. I pressed the home button and then it asked for a 6 digit passcode.

This is where the problem is: The passcode he used to initially set up the phone won't work. And then passcode on his old phone (which is different than the passcode on his new phone) doesn't work either. I tried 123456. I tried 000000. I tried the last 6 digits of the phone number that was assigned to this phone before activating it. I don't know if the passcode is a passcode for the backup that was set up...which we dont know? Do iCloud backups have encrypted passwords?! Thought only backups on iTunes are encryped with a password?

This is where another problem is: You'd think...oh just put the phone in restore mode and that will reset the phone and you can redo the setup again. NOPE. It won't hard reset the phone or put it in restore mode because when I plug the phone into my computer, iTunes doesn't recognize anything because 1. It was never synced with iTunes before and 2. Because of the white screen that says 'Press home to upgrade', it basically isn't in a state for it to be recognized until you can get to the lock screen but I can't get there without the passcode.

So to put it in restore mode, I pressed the volume +, then volume -, then held the power button until it turned back on and went to the restore screen of showing the iTunes logo at the top and then an iPhone cord below that like to plug it in to the computer but it was already plugged in! I've already tried too many passcodes so any attempt that is wrong now disables the phone for an hour. Or if it is not disabled and I hold down the power button until it hard shuts off (because if I hold down the power button, it doesn't come up with the slider to turn off the phone because of the white screen its on), it will disable the phone again for an hour without even typing in a passcode.

So do I have a permanent brick on my hands here since the passcodes that are associated with this new iPhone and my dad's old iPhone won't work?! Is there a different passcode that is needed after restoring since this iPhone has a different phone number than his normal phone? Do the backups request for a passcode after it's already been restored if the backup DOES have a passcode to use it and that's what passcode it wants?