If we rent the home to him, and he lives in it (legally, has utilities in his name, etc.), as a tenant, he can do work on the home without needing to be an employee, correct? 

If I read your post correctly, it's legal to use more than one money partner on a deal, but you have to have your legal paperwork in order to do so.

Unfortunately, this doesn't speak specifically about the HOA facilities.To preface my concern, I know nothing about legal.

Landlords are increasingly doing this though I don't do it as in not a common practice for the rentals I own.First the legality and the process.

Unfortunately this house I bought was in an FHA loan and as far as I understand it, I cannot legally rent out the house since FHA Loans are for owner-occupant only.

(That might be pushing it but if I just miss my goal then I have set my goal right.)I am good with people and numbers and I am not good with legalities (so I am doing alot of focus on that here on BP and in my own studies) I also saw I just missed the Olympia REI Meetup when will the next one be?

With the two units am I going to be restricted to investor or multifamily loans even though they cannot be rented out legally? 

Just looking for legal ways to keep my money!  

If I may suggest if you are looking for specific legal, accounting or some other specialty knowledge information my standard answer is based on my 25 years experience but with the caveat to always check with a local professional in that specific field.  

The legal standard, not your standard, is what a reasonable and prudent person would do.