Also 4 adults utilities are going to be much higher then a family of 4 more then likely, and if you ever wanted to sell the potential for a family to buy the home over multiple individuals is greater.

The persons living in the property are not the owner, but her adult daughter and family.

My business practice is to NOT add an adult who hasn't been screened for credit/background.

These are family members, yes, but they are also adults who made a promise and failed to keep it.  

They are both extended family units with three adult renters and several children/grandchildren.

If your criteria says that each adult must qualify on their own, and these guys don't, then you deny.Plus, whenever you can legally deny anyone going through a divorce or just freshly out of one, it's the thing to do.  

I am a newbie and trying to get some advice regarding how many adults and children can comfortably live in a 2 BR, 1.5 bath rental unit in a duplex.

Now, however, they have discovered that the 15 year old sister of one of the two adults named in the lease, has been staying there.  

Could a parent buy a home for their adult child (who could not afford it on their own) to live in and get the same 5% down/owner occupied financing rates?

The one Sheriff at the door literally grabbed him by his shirt and placed in on the sidewalk outside the front door and he stepped inside. 30 seconds later, saw four adults leave the house - nothing was packed - after 5 months of hell from these people.