I found a house for sale that is actually 2 houses on the same lot. Both properties are included in the sale and the smaller one is currently rented.
Is this something permissable to FHA?
lucky for you--hard to find those properties in my area! I'm not an expert at all, but I think if the 2d property is subordinate (smaller) and you can say you are owner occupying and using the 2d property as a mother in law unit, FHA would do okay. You should get an answer from more knowledgeable folks though. However you might also want to examine the title carefully for problems and also zoning problems.
It may depend on if there are actually 2 deeds or are both properties on 1 deed? I had a small hiccup in my mortgage process because of a similar situation - but there are 2 deeds to my property.. I paid cash for the rental and own it outright and the mortgage on the main house.. The underwriter didn't really like it, but finally got it passed without too much of a delay.