Buying My Neighbors House

[Conrad Anthony]

Background:  Sooooo, my neighbor passed away a couple of weeks ago and has left his house to his granddaughter who wants absolutely nothing to do with the property.   Her and i spoke about the possibility of doing a fsbo, and working with an attorney to close the deal.  The house is old but has great potential, and she has already decided to reduce the asking price by 50k as a result of the new homeowner having to upgrade the entire home.

Going in conditions: I currently have a mortgage that is in my name only, which i owe 209k.  My home recently appraised for 280k.  My wife has perfect credit, but an insignificant income, as she only works 4 to 5 months out of the year as an Air Force Traditional Reservist.  

Question: Will i be required to provide 20% down to purchase the property?   Secondly, is using the equity in my primary residence a good idea to aquire the second property??

Clear as mud?? 

Thank you in advance for any help!

V/r

Conrad Anthony