Specifically, does the regulation still apply if I am the host and reside adjacent to the rental property?

The purpose of this test is to ensure that the property generates enough rental income to cover the property's mortgage payment, including principal, interest, taxes, insurance, and homeowners association dues (if applicable).Key Points of the FHA Self-Sufficiency Test:Applicable Properties: The self-sufficiency test applies only to 3- or 4-unit properties being purchased or refinanced with an FHA loan.

My questions above apply to them. 

Discriminating against families with young children is illegal, so if such a family applies and is the best tenant, you are required to delead the property before they move in.

I’d love to hear if your biggest home runs have been from: a) buying an existing STR, tweaking it with your own unique skill set and applying your experience-proven enhancements to be a top performing property, orb) converting a previously non-rental property into an STR?

So, again, this only applies to using the new value for cash out.  

Recently I started working with a college kid who is doing some wholesaling to make some money and get his foot in the RE door.He had read about house hacking with a partner, where he applies for the FHA loan and finds a partner to cover the down payment.  

You're going to owe what you owe; anything you do now is just after the fact that would apply to any tax situation.

You could benefit from meeting with folks that are actively applying theory into practice which could help clear up the mental fog you're experiencing. 

Upon receipt of a $10,000 wire transfer or certified check, which would be applied toward the commitment fee, we would provide you with a draft of a loan commitment containing the terms and conditions to be reviewed by you and your counsel.