Hi Drew
Thanks you for clarifying. I really appreciate your support 
I went ahead and used the exact configs from the templates, and changed the KERNEL_IMAGETYPE to zImage, but unfortunately I still get the same error ( Bad Linux ARM64 Image magic!) so the kernel is not loaded.
The only thing that kind of worked was to disable mender-uboot and enable mender-grub:
MENDER_FEATURES_ENABLE_append = " mender-image-sd mender-grub"
MENDER_FEATURES_DISABLE_append = " mender-image-uefi mender-uboot"
By doing so, the kernel was loaded successfully and the board booted to Boot2qt, but took around 2 minutes to finish booting (without mender it took less than a minute). Doing it like this means that u-boot loaded grub, then grub loaded the kernel and this is not what I want. I need u-boot to load the kernel.
The guy from this post had the same problem, and said he solved it by changing the dtb file in u-boot-variscite.bbappend. I did the same but no success 
https://hub.mender.io/t/variscite-var-dart-imx8mm-problem/2811/13
Any other suggestions how to fix the “Bad Linux ARM64 Image magic!” error?