Is a legal in-law ok in a 4 family with FHA financing?

[Jody Kennedy]

Hello, 

I'm looking to purchase a home that's currently a 5,600 SF SFH, it was converted from a 5 family years ago when the daughter inherited it and wasn't interested in being a landlord. She kept the apartments maintained and heated (one one system and service now) but never rented and legally converted it to a SFH with the town. The town never made her tear anything out and only changed the status and assessment to lower her taxes! (back in the 70s when things were oh so much easier.)  So the apartments are still perfectly intact and well preserved, kitchens, entrances and all, even the appliances which work great! It's truly like going back in time and the current town officials were completely unaware of all of this LOL as the old officials are now long gone and nobody was the wiser.  

So after many hours with the town and digging up old field cards in the basement they found the original 5 family card and eventually agreed to grandfather it in and approve a reversion to a 5 fam or less, whatever I would like and obviously after I close. Happy dance as it's being sold at the SF appraisal price!!!   

My only choice at this point is an FHA 203K, which will allow me to update it and convert it back to a four while I live there for the first year. After all is said and done, signed off on and closed, can I create an in-law that collects rent and not have it considered a 5 family (town is fine with it so that's not the question) But as we know a 5th "apartment' pushes me into commercial in ways I'm not interested in, so only want a 4 fam with a legal in-law if possible. Does anyone know if this would fly (with FHA, with insurance, with resale?)

I know this is a gray area and not all agree on what constitutes an in-law :/ 

Thank you in advance for wading through all the details and any light you can shed.  Jody