What really matters is how long you think you will have this loan. 

Rates tend to be 25 to 50 basis points above commercial (5+ unit) apartment building loans, and 50-100 basis points above residential (1-4 unit) loans.

So for the first property which will cost over $1 mil to construct, there will be stacked loans, essentially $280K will come from loan assistance program,( the name is not correct but the same idea).

Loan interest is deductible based on the use of the loan, not the asset securing the loan. 

Purchase price: $240,000 Cash invested: $60,000 purchased this distressed duplex using owner financing for $240K and a $60K hard money loan for renovations.

If I got a home equity loan for Property 1 and used the proceeds as downpayment for Property 2 and then got a 2nd loan for the remaining 75% purchase price for Property 2, when I sell Property 2, can I use the Property 1 loan as part of the cost basis for computing Property 2 capital gains?

We closed on the construction loan June of 2021, the permit came through Nov of 2021.

I think you would be wise to sell and use the VA loan for your new home. 

If you did finance some of the purchase using a non-recourse loan, then you need to read up on UBTI/UDFI and there are some taxation benefits that the IRA can achieve since it now owes taxes in that scenario.

(Even went beyond the second page of Google.)I have an investor who wants to partner on a deal by providing a loan for the down payment.