It's great that you want to house hack and that you have a solid foundation of savings, but like others have said, you will need steady tax returns for two years to apply for a regular FHA loan and the income has to work and be consistent.

When applying for a mortgage (making assumptions here), the lender will want 3 months of bank statements, W2s, etc.I agree with others here that house hacking (living in a house you are renovating) is the way to go AND in your situation, buying a duplex or similar income producing property will help if you apply for a mortgage. 

As always, be sure to contact your accountant to make sure these situations apply to your property!

They should be able to take the average rental rate for the area and apply it to their calculations to submit to underwriting. 

I have a couple that applied for my SFH. 

Don't forget that you'll be required to pay for an appraisal and usually required to disclose if you've applied for additional financing on that property.

I closed on one there last month and meets a 8% cash on cash when applying the variables you listed.

I don't know a lot about reverse mortgages but from what i understand once her mother passed, she had a period of time to make arrangements but she applied for extensions which i assume got approved.

When the taxpayers demolished their existing principal residence, built a new home on the land, and sold it before ever occupying it, the Tax Court ruled the gain resulting from the sale of the never-occupied home did not qualify for exclusion under IRC Sec. 121 (Court case: Gates).Not sure if Gates applies here, because nothing would be added to the formerly residential land, only removed from it.

@Ellie Narie have you asked the tenants to apply for rent payment funding?