I'm in Florida (lower cost), and I picked up a duplex a couple years ago as an owner occupied unit.

Homeowner insurance provides coverage for owner-occupied property.

Also the idea that occupying a 'piece' or 'portion' of property allows for AP is flawed.

Sell it into an S Corp at market rate, that you are the owner of, taking the tax free gains because you owner occupied it. 

@Kris Lou Be careful with agents as 95%+ of them really only know how to handle owner-occupied transactions.We don't do biz in Indianapolis, so this is unbiased info we hope you find useful:Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.Property Class will typically dictate the Class of tenant you get, which greatly IMPACTS rental income stability and property maintenance/damage by tenants.If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.If you buy/renovate a property in Class D area to Class A standards, what quality of tenant will you get?

For example in many jurisdictions I can STR units in a duplex but cannot STR an ADU (some jurisdictions will let you STR if you owner occupy).

While they apparently only subletted the back room from the previous tenants, they now occupy the whole house freely without paying any rent, and we've been unable to file an unlawful detainer due to the eviction ban even though we posted the notice in mid-February. 

I’m also making the property my primary residence to lower upfront costs, effectively turning it into a house hack.With this setup of me now occupying a room and not including utilities. 

However, we don't see prepayment penalties on owner occupied loans.

If it's in a shared space like a basement that's one thing but if it's in an occupied unit, that is something that may not be allowed in your jurisdiction.