The great part is that we can do anything on the inside and that is where it counts. 

Taxes and insurance are actually included in the 50% rule so you have actually counted them twice. 

The paperwork was being shuffled off to an attorney, which if they charge any fee, that will count against the 3% cap.  

Live it in a year or two (whatever the minimum amount is for the low down payment loan program) and then rent it out and buy another one A duplex would be the best because then you could get your 2 years of experience owning property and could count the rent towards your income to qualify for more loans.The real key though is that if you buy it right (70 to 75% LTV) and you get a couple years of principal paydown and appreciation, then maybe you could use that house to get a HELOC up to 80 or 85% as your primary residence before moving out. 

Lenders usually want to see a history of 2 years rental history before they can use that to count towards your income. 

If you mean Houses of Multiple Occupancy as used by the British (in the states the term is usually MFR, Multiple Family Residence), then you have to define how you count 200.

In regards to the tax accounting, do not count your chickens until they hatch.  

A problem I've run into before is that the Underwriter whose reviewing the loan and the borrower which was me, wasn't willing to count gifted money from a relative as income and actually subtracted it from our available funds. 

I have a single family home where the Section 8 inspector said it didn't count as living space, because you had to go through a bedroom to get to the staircase. 

Don't count on Zillow when analyzing properties in Milwaukee.