My apples happen to be conforming small multi family in north Stockton build in the late seventies or early eighties. 2 to 3 bedrooms. 

Also, there is a myth that "portfolio" lending (non-conforming loans to Fannie Mae/ Freddy Mac guidelines kept in house at local banks ) require less of a down payment.  

Banks have to stick with conforming loan guidelines or do an in house commercial loan.

It looks like NM requires interest to be paid on deposits so be sure to conform as suchI would not have caved on the money due so quickly but have used it to bargain with later if need beTenants will often threaten to sue but very rarely follow through. 

Agree 100%, get advice from a "been there done that" investor, not a salesman of turnkey property.At least with the banks around here, going from a freddie/fannie conforming note to a portfolio loan raises my interest 0.125-0.25% tops (not 2%), and the required down payment goes up 0-5% ie. 25% down, not 40%.

. $533K with a duplex:http://www.fhfa.gov/DataTools/Downloads/Pages/Conforming-Loan-Limits.aspxWhen I buy another home can I subtract the $533K from $270K leaving me with $263K to purchase another property?

With investment into the basement area, I can make it a 4 (legal) bedroom, a 5 (non conforming), or a totally separate apartment (although there are not split utilities so it's not going to be simple or cheap).  

For FHA you have to intend to live in the building so this may be an issue if you're planning on living in a unit that is non-conforming right now.

Justin:When Thomas asked about legal non-confirming, I do not believe he was implying your house is not compliant with building and fire codes, but was asking if it conformed to local zoning by-laws.We have student housing as well and it has been our experience that most university towns have occupancy by-laws limiting the number of un-related adults in a single dwelling unit (usually to 3 - 5) which are specifically aimed at student rooming houses.  

Assuming you are doing enough work and the type of work that requires permits I would say that you can simply state all rough materials and installation to be code conforming.