If it was allowed at one time and it continued to operate as a 3 unit, you would be considered having a non-conforming building.  

If you're looking for conforming vs. jumbo, say it.  

Hi, I live in the city of LA and I am on the path to purchase my first home within the next 1-2 years and I was thinking about potentially house hacking so I could apply for a FHA or conventional conforming loan to be able to get a 3.5-5% down payment, but then I began to wonder if it is possible to live outside of the house (in other terms rent & live in a separate property) once I have already been approved for the FHA or conventional conforming loan? 

I am currently renovating the basements of the property and adding egress windows to make each side a conforming 5 bed 2 bath home (10 bed/4 bath total).

But if it were me I would totally use a 30 year conforming residential mortgage.

In all other respects, these dwelling units shall conform to the minimum prescriptive requirements for residential dwelling units.

For a loan to be sold on the secondary market it must meet what we call "conforming guidelines" and I have heard statistics that between 80%  - 95% of all loans are sold on the secondary market.  

Maybe you're looking at generic vanilla conforming 1-4 family.

If you have this currently and the HML includes the funds to repair - then you shouldn't have any problems having the 20 -25% (equity) you would need for your conforming loan.

You can put the same Fannie/Freddie debt on 4 unit or less property, since that is still considered residential property ... to my knowledge, though, you can't find 30 year fixed, fully amortizing loans with the same or better rates you get from Fannie/Freddie conforming mortgages on commercial property of 5+ units ...