Cottage is permitted.  

The borrower may be permitted to obtain another home with an FHA insured mortgage if the number of legal dependents increases to the point that the present house no longer meets the family's needs.

I use 10%, but I don't have a large enough sample to know if that's right, and most of my units rent for less than $600/mo.Make sure you count up all the taxes carefully as well, including occupancy permits and various other ordinances that exist in the Pittsburgh area.

Of course, just because they have it as a 3 bed, doesn't mean bldg permits weren't pulled to add the additional square footage.

I can't find another example of this cobblestone being used in the US.We had to go through a Coastal Development Permit that took 9 months, then the building permit after that, which was expedited due to the fact the project was modular so I didn't have to deal with city approvals or inspections which really streamlined things. 

Make sure the Use Occupancy Permit is approved, and the prints on record match that permit.

He claims to be one in Illinois.I did pull permits for the work to be done but that was done thru my other contractor who is doing my roof, windows, and siding.

@Brant Hampton,I understand you are a new comer.

Also, you may need permits/fees to demo as well.Good Luck.

(again I strongly suggest going the permit route to help again limiting liability).