I've heard there's a good chance the mortgage company won't care as long as the payments continue to be made on time but I still want to protect myself just in case.

The SST doesn't apply for legal 2-flats so if you want to use FHA it's probably better to target those that maybe also have a non-conforming basement or attic unit.This is why the 5% down conventional loan is a game changer for house hackers.

To improve cash flow, consider a higher down payment, mid-term rentals, or renting by the room.

Also a non-starter is your hyperbolae; "toxic waste lot's"......

So my inclination is to compromise her 50% request payment to 25% as stated by Mark and Martin. 

I've been corresponding with a non profit in CA that is doing work on ADU regulations, etc.

There are large areas in the direction of the flight paths that do not have dense populations so it’s mostly a non-issue.

And what happens after the 5, 7 or 10 years depends on the lender but typically it would be a balloon payment.

One thing to be aware of is the FHA multifamily self-sufficiency calculation which determines if a property can generate enough rental income to cover its mortgage payments.

I can get prime-0.51% on a HELOC but I don't love the risk to my monthly payments if rates rise - that is why I like the fixed second mortgage option.