Since you won't be able to recognize it as a valid rental if you're charging under market rent and you also expect to be covering any house expenses that are outside of her budget, this seems the best choice. 

Also, you could also hang out at some local ice rinks where people take their kids to hockey practice!

Im hoping to find an investor to help me buy the lot next to mine so i can move up from doing tax deeds.. if not i have my next lot picked out and will continue to invest in them while i fix my credit and learn more on investing.. i have always wanted to be successful in life but drugs and bad choices have kept me from it.. now im proud to say there is nothing that will stand in my way of realizing my dreams Just following up.

I went with the conventional option for a few reasons, but that's not the best choice for everyone.

Should it simply be one of two choices: deny application or accept application with ESA exemption even if the property qualifies for the FHA exemption?

Overpricing will likely lead to longer vacancies and lost income.Respond QuicklyTenants have more choices than ever, and properties that don’t respond to inquiries promptly may lose out.

It's deceptive practice, plain n simple. 

Going through my real estate journey I have learned a lot, I am 24, a veteran and a graduate from Temple University,I started with aspirations of investing on a property and making a quick flip.My problem lied with fear of failing, my capital and my savings.I decided I wanted to learn the real estate market and know the ins and outs before I would make a bold choice on buying my first real estate home.

Based on your description, Party 1 seems like the safer choice.

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