If they are doing hourly or salaried work that is not "the practice of real estate", then you're fine.For anything that falls within "the practice of real estate" in your state, you most likely would have to pay their broker/brokerage - so they would need to have a sit down with their broker about how the fees would be allocated between the broker and the agent on the receiving end.In California, the practice of real estate is defined as:"a person who, for a compensation or in expectation of a compensation, regardless of the form or time of payment, does or negotiates to do one or more of the following acts for another or others:  (a) Sells or offers to sell, buys or offers to buy, solicits prospective sellers or puchasers of, solicits or obtains listings of, or negotiates the purchase, sale or exchange of real property or a business opportunity.

These loans are not based on the purchase price, or down payment, FICO score, or anything else, they are based solely on what they will lend toward the appraised value of the house.Does anyone know of any lenders who will lend based on a percentage of their appraisal amount?

What are her current monthly payments? 

It's listed at 50k+ but I don't have 10k as a down payment via a traditional mortgage, hence why I was leaning toward an FHA loan.

Receiving rent payment is your only issue, stay out of his personal life.This is one of the reasons I never rent to anyone that is self employed.

He is a hands on landlord and drives around with ten thousand or more dollars in his pocket, day and night, collecting the rents and checking on his trailers and prefab homes to make all his payments and repairs.

*grants do pay your down payment, but the interest rate might be a bit higher as well, so a refinance in a year or so might be a good idea.

If you take into account that rent will continue to increase over the years while your payments remain the same your cash flow will only increase.

I closed the deal in the end May 2016 and I'm now on my second mortgage payment.

You can go up to a 4 unit and get favorable gov't financing for owner occupied buildings with low down payments and low interest rates.