asking questions for the sake of it isn't helpful.Find someone who is doing exactly what you want to do, then ask how to overcome the specific obstacles you're facing. what is your motive for the meet?

@Aroldo Villarreal  I agree with Jay that you need to season the note but you will want to do that with a servicer,  FCI, Allied Servicing etc, iso you can document pay history.Not sure of your math but with the 141 payments remaining at 9.2% and a 52k balance it looks like the payment should be closer to $604.64.Given the above you could probably sell the next 62 payments of $604.64 for $25,000 and keep rights to the back end payments.If you wan to pursue the above there are going to be a few obstacles:  1)  If the property is owner occupied you will have to be able to convince an informed note buyer that the note is either exempt from or compliant with Dodd Frank.  2)  a not buyer is going to want to know that the property is worth enough that in the event of foreclosure there is enough equity to cove the loan.

I guess my question is what obstacles do I face if I apply for a mortgage with this job and income scenario?

My initial thought is transferring to llc but I’ve heard of “due on sale” clauses presenting an obstacle. 

Within the city limits (I think both suburban and urban tiers) you can now have, by right, up to 3 units (2 in the form of a duplex and 1 in the form of a detached accessory dwelling unit).Of course, the problem is that construction costs are so high, ADUs are difficult, but if you have a garage that could be converted easily, that could be a good way to go!

If they are detached it will be pretty similar to SFR. 

Keep in mind even if you're living in a paid off house, taxes and insurance will still have to be counted.If you have more than 10 payments left on the car loan, that will still be included, although that also doesn't seem to be the issue.It seems like the issue of the gift funds would be the bigger obstacle. 

So I came across this great opportunity in the City of Long Beach, which has a detached garage that im looking to convert to an ADU.

I am not saying there is not a program out there that is worth the money, but I have not come across one yet.Make sure you do additional research and make sure that is the best use of your money at this time, because in usually in the beginning money is one of the largest obstacles.

Am I missing a big obstacle or law that makes this not a good option?