Is it illegal to rent basement?

[Ana Coello]

Hello BP community!

I have a big question. Here's the background: my partner and I have a realtor that sent us to a loan officer for us to talk to him about the best way to do our 2018 taxes to have the best chances at a great loan. Now we talked to the guy and he ran our credit and is in the process of getting us pre-approved (not what we initially wanted at the stage but ok) and we told him that we wanted to rent out the basement of our house and he said that was illegal for an FHA loan. We are looking for something in Maryland. Is that true? He is also saying that 203k loans aren't the way to go and that only one of us should be on the loan. I don't want to do anything illegal but how do people rent out rooms/basements and it being ok with the lender and everyone else? Any help is great!

Warm wishes,

Ana Coello