Typically they are not eligible for traditional financing which implies other funding sources (HML, private Monet, self funded, etc).  

But if you look into their marketing, socials, Youtube, IG, past sales record on Zillow and stuff you can see if they really are in the investment space or if they work with traditional homeowners.

If the property appraises for $500,000, you would only be able to cash out $375,000.Would this still be true as a primary residence or would we be able to find something like 5-10% down on a 30 yr loan?

Our primary asset is a house we bought in 2021 for $975 (3% interest rate).

If you’re close to $150,000 in AGI, a few ways you can bring that down AGI is by maxing out a 401k traditional ($23k for 2024 tax year), maxing out your HSA ($4,150 for 2024 tax year), and if you have any capital losses from stocks (up to $3k per year), I would encourage you to have great bookkeeping to ensure you’re capturing all of your deductions appropriately on your rental property.

If traditional banks aren't providing favorable terms, consider alternative lenders like HML or PML.  

You are buying a primary residence so should be able to take advantage of an FHA backed loan.

Real estate, by default, is passive and the primary way to avoid the passive loss rules is to qualify as a real estate professional.Full-time employees and non-real estate business owners cannot qualify as a real estate professional (aka REPS status) because one of the tests is to spend more time in real estate than anything else (and it’s unlikely that you can convince the IRS or Tax Court that you spent more time in RE than your day job).

The primary reason is that my parents' risk tolerance is much lower than my own (they are retired and are on fixed income).

But as a property grows in size your rent/sq ft generally decreases.And right now the profit from that primary residence is tax free!!!