That said, there are "exemptions" to having to being licensed as a BANK, and still being able to lend to owner occupants, doing a seller financed loan.  

About 2 people per bedroom is a common occupancy standard. 

My house was built in 1940 in case your wondering about all the repairs.I have had tenants break the contract twice, both for legitimate reasons (new job, bought their own house) and there was no break in occupancy. 

@Daniel Fierros Everything that @Patrick Desjardins said plus:Legitimate Occupant or Squatter doing substantial damage (I've bought burn-outs from this)Governmental agency condemning the property and tearing it down (happened to a note investor within the last 6 months or so and he learned about it when I couldn't find the house he wanted to sell - the land was now a community garden)Note and/or mortgage improperly or illegally written or originated or not properly executed. 

if the cops won't put him out then you can file eviction for the unknown/unauthorized occupant(s)

Does anyone know maximum tenant occupancy in a rental house?

Yes, we missed you at the last meeting:) Currently my husband and I are closing on our house this friday with a FHA/203k loan and from my research it can only be used for owner/occupant.

I'm not quite sure this would be an owner occupant flip, but would be more attractive as a long term rental/income property.Any advice would be helpful as I plan to make my offer this week and will keep everyone in the thread updated.

However, my accountant says I have to own the property (either as a rental or an owner occupant) for an additional 3 years (for a total of 5 years) before I can claim a 121 exclusion.

They'll waste them.You could split the utilities 50/50 (or based on occupancy) since it's only you and one other.Or include a utility allowance-- if they go over that amount, they pay more.A meter is the best if possible.