Sell the empty house and use it for your down payment.
If you are going to be caring for your mother for an extended time, it is only fair you get this benefit from these properties and not your siblings.
I don’t know what type of profit you’ll get, but if she can claim it as a residence capital gains taxes may be 0 rather than 20%, which I think is now the long term rate.
It may not be worth it to declare it a residence then wait around for the minimum time. With a 15k profit it would only be a savings of $3000 in taxes.
The capital gains tax on profits during her lifetime goes away on her death. So if one is at a big profit and the other isn’t, sell the one without the profit first.
Or maybe sell them both. I got a 5% down mortgage with no problem and a low rate in 2012, however I had to pay $250 a month in mortgage insurance. You’d likely have to pay more like $4000 a year in mortgage insurance if only put down 5%. The best thing is to put down 20% and not pay any.
Finally, with these assets your mom may not be able to qualify for Medicaid, another reason for her to gift them now not later.
It is very common for older people to gift assets to their kids to qualify for Medicaid. But it is better to do it before you need Medicaid.
Another iasue is borrowing against a property in your moms name will not be tax deductible since her income is low, and she isn’t going to get a good rate for a variety of reasons: cash out, little income, low property value, not owner occupied, small loan size.
I rank your options in this order:
1. Sell the old houses and buy a new one
2. Sell the low profit house, or if there is no big difference the empty one
3. Try to save up 5% for a downpayment, and work hard to pay it down to 20% so you can refi to remove the wasted 300-400 a month mortgage insurance.
4. Borrowing against your mom’s property for a downpayment.
Or maybe just rent a bigger house!
I also second the other comment that having three kids, a disabled parent, and two rentals in other cities is a recipe for extreme stress. Something will eventually go wrong at the worse possible time. Get rid of them even if you decide to keep renting. Stress is bad for your health and you have many people relying on you.
