Family Financing House Hack

[Bill Regan]

Hi BP Lending Gurus.

I'm less than two years into my base + commission job. I'm making some good money, very good credit, but understand a lender won't count anything but my base income for a mortgage. This wouldn't qualify me for much more than a condo in our market. My wife & I plan to house hack and have a property in mind with an in-law unit that has a lot of potential, needs some cosmetic updating and has been on the MLS a little bit now. They are asking 235k for it, our Realtor thinks its more in the 195k range really.

Some family members have graciously offered to finance this property (or another) for us.  

This would be ideal for this house as the in-law unit gives them a place to crash when in town and we can use it for vacation rentals other times.

I'm wondering what the best way to proceed with this would be:

They get a loan for a vacation home with 10% down that we reimburse them for.   Seems they'd get some advantages by being able to write off loan expenses, but higher closing costs.

They get a HELOC on their primary residence so we can make a "cash" offer on the house. Lower upfront fees, less tax write offs?

Or??

We would be taking a mortgage out in approximately 14 months to buy it from them.

Open to suggestions and feedback!  Thank you.