Advice on Dads VA Home Loan Assumption

[Joel Amparan]

Hello everyone,

I am fairly new to REI, and I'm currently living in my parents house which is in a newer subdivision on the Northwest side of Pueblo, Colorado, the nicer area. I am trying to obtain and generate additional income, and expand my portfolio, and am seeking advice on some decisions and choices I need to make to help to accomplish this. Our yearly income is not great at appx. $70,000/year, both my wife and I.
I moved here from my 3BD 2BAprimary resident single family home in Colorado Springs, CO, about 40 minutes away, which I currently rent out.  I also have a 2BD 2BA Condo (on the market) a short distance from here, both being in relatively nice neighborhoods.  

The reason I am selling the Condo is to pay off some personal, and unexpected debts of about $18,000 to decrease my DTI to help me qualify for my Dads VA loan (they want to move to Texas), which is a 3BD 2BA single family home. I really do not want to sell the Condo because I do have a 3.5% Interest rate w/ a positive cash flow of about $450/month, even after the $330 HOA fees. I also know those HOA fees can go up too! I have about 13 years left on the loan, and about $100,000 in equity. My Dads VA loan comes with a 2.5% Interest rate with roughly $70,000 in equity, which I will also pay to them to assume the loan using the proceeds from the sell of the Condo. His monthly payment is $1365/mo, and the house is 3 years old. I can't 1031 exchange because when I assume the loan, it needs to be as my Primary residence, for at least a year.

Another option for me is this. I took out a $50,000 HELOC @ 8% Interest from my Primary residence in Colorado Springs, before I began to rent it out, I had no idea at the time my parents planned to move. Obviously I know I will need to pay this back ASAP which can be risky using my primary as collateral, and I don't think I can qualify for another HELOC/HELOAN from the Condo because of my $18,000 debt, right?? I also have about $60,000 in a Traditional IRA that I thought of pulling, but the taxes and penalties might be far to great since I am 44 years old, not 59 1/2, but is still an option. Is it worth it? If and when I assume the loan, I can rent it out for about $2200, which will generate about $835, no HOA and of course I will save some of that for maintenance/repairs and other expenses.

Do any of you have some advice on different options? Any guidance as to what you believe I can do? Should I use the HELOC and IRA to pay my debts and assume the loan? Do I try for another HELOC/HELOAN?

Appreciate the time and thank you much in advance!