Also maybe turning it into a two family home to maximize rental income is an idea.  

I lived in the attic instead of using the “livable” space so I could use rental income to pay for the mortgage.

. # things to look at when applying for a mortgage are credit, assets and income.

He originally told me that he wanted $5k in passive income of just interest only.

It won’t affect your debt-to-income ratio and won’t affect credit score/history.

Had my eyes set on a NH for a little while now and wanted to see if anyone had any advice/insight on claiming a 2nd home / STR property in NH as your primary residence in order to take advantage of NH not having state income tax.

I'd speak with a lender about this, but they can probably use your rental income towards the next property or at least use it to help with your DTI ratio.

Because I have reduced my expenses to less than 500 a month, and enjoy a more frugal lifestyle as it is, I am content pooling all available income to real estate, in order to accelerate this process. 

And as a % of total income it’s historically high.

The good thing about bieng in Florida is that the state does not have a state income tax.