Even if it did conform to FHA guidelines, which I don't think it does, you still have to get the bank to approve the loan.

I've had great success working with a local bank for commercial loans on non-conforming properties. 

Towns and cities in my area consider renting a housing unit to more than 2 unrelated people else it's a rooming house and must conform to rooming house regulations, including registering, licensing, annual fees, having a house manager, assigning room numbers to name a few.

Basically, you can't qualify for a conforming residential loan, so now you need to move on to nonconforming loans. 

I do not want to run into an issue where I buy the home and then im unable to obtain the permits, or have to tear down the unit because it is non-conforming. 

It has been grandfathered in and currently is allowed to be an operating, non-conforming triplex.

I posted in a related thread about condo conversions of two legal, non-conforming 4-plex's in Colorado.

For a conforming Fannie Mae or Freddie Mac loan, you will get very consistent answers.

no, do a search and you will find much information.You can get up to 10 conforming mortgages in your name, however many banks don't do over 4,,this is a good reason to find a mortgage broker that works with investors

In your case, finishing up a basement - if you’re adding conforming windows- would require a permit.