(pick up the phone and call the seller realtor to get actual expense numbers)total time: less than 1 minute.Don't dwell on the x% scale.  

Some companies offer credit on dwelling fire / rental policies, others don't.  

In fact, I don't even know anyone who got nailed for anything above insurance limits with a single family dwelling, 1-4 units.  

Sounds like you are all set up to convert it and make it a legal ancillary dwelling.

The time and process taken between now and renting lower costs dwellings is TBD.

Justin:When Thomas asked about legal non-confirming, I do not believe he was implying your house is not compliant with building and fire codes, but was asking if it conformed to local zoning by-laws.We have student housing as well and it has been our experience that most university towns have occupancy by-laws limiting the number of un-related adults in a single dwelling unit (usually to 3 - 5) which are specifically aimed at student rooming houses.  

I'm worried they're going to call it an Aditional dwelling unit and decline the loan.  

Though the Hotel and Multiple Dwelling Law provides that multiple dwelling buildings having a condominium or cooperative or mutual housing corporation form of ownership are under the Bureau's jurisdiction, the law also exempts sections of such buildings that: 1) contain not more than four dwelling units, 2) have at least two exterior walls unattached to any adjoining building section and where attached, are attached exclusively by fire-resistant rated walls, and 3) contain dwelling units that are owner-occupied (if both owner- and non-owner-occupied units are contained therein, only the owner-occupied units are exempt)."

Such acts and omissions include, but are not limited to, the following:(1) Manufacture, cultivation, importation, transportation, possession, furnishing, administering, or use of illegal drugs in the dwelling unit or in the common areas.(2) Illegal use, manufacture, importation, possession, furnishing, or discharging of a firearm or firearm ammunition on the premises of the rental property, except for the use or discharge of a firearm or firearm ammunition in cases of self-defense, defense of a third party, or as permissible in Section 13A-3-23.(3) Criminal assault of a tenant or guest on the premises of the rental property, except in cases of self-defense, defense of a third party, or as permissible in Section 13A-3-23.(4) Any breach involving substantially the same acts or omissions as a breach for which a notice to terminate has previously been provided for by the landlord and cured by the tenant, if the second breach occurs within six months of the first breach.

And that is, finding a property with a detached garage or a basement with a separate entrance/exit and converting that space into an additional dwelling unit (called an ADU) which I can either rent out short term on airbnb/vrbo or longer term.