Refi the house so they can continue to live in it, they will get the best loans on their primary residence.

If a HELOC isn’t an option, alternatives like a home equity loan, business line of credit, or a DSCR loan could work depending on your situation.

Quote from @Sri Reddy: We are a team who are venturing in to constructing a multifamily unit from groundup.We don't have any prior experience in construction and are looking for financing loan options.

You would then have two loans, one on your home and one on the refi to access the equity on the investment home.Why not just use the refi cash out from your home loan for future deals? 

Conventional loan How did you add value to the deal?

I can get a 30-year fixed loan for 6.630%.The property taxes 1,976 /year i.e. 165 per month. 

construction loan How did you add value to the deal?

I got a PA for 300k/FHA loan. 720+ credit score, 75k cash, and good income.

First time buyer loan with 11% down.

I would look at the DSCR loan as the first option.By the way, I suspect you are going to be disappointed by any refi appraisals   ADUs typically appraise poorly   JADUs can lower the property value Vs having the space as part of the primary unit.