[quote=TexasLine]Wow. I guess this is more complicated than I thought.

My mother would not be able to qualify. She is handicapped and has no job. She would, in theory, move in with us and we would use her properties to leverage as down payment for the house we would all live in…so I guess she would need to take out equity and give that money to me which I would then use as a down payment? I think there are severe tax penalties for doing this, which I of course would want to avoid.

But to simplify, I still am not sure of the basic principle of whether or not one should take out equity or simply sell the property for a down payment.

Do all brokers posses the knowledge to deal with this kind of issue?[/quote]
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What complicates it is getting advice from people who don’t know what they are talking about.

severe tax penalties ?
Ask your tax advisor if there are penalties for refinancing and taking cash out.

Does she report rental income on tax returns?
Does she have any SSI/Disabilty/Pension income ?
She may be able to qualify for more than you think. She doesn’t have to have a job.She just needs ‘qualifying’ income.

Brokers should ‘possess’ the knowledge, but sadly they don’t..and there’s some really bad advice on this website from people based on their (limited)experience that can confuse you too.

Mom MAY be able to borrow up to 70% of the current value of the properties, I doubt any more than that, IF she can qualify.