For the 3.5% down payment, you'd still need that money, which best case scenario, you can have a family member provide you a gift amount.

-assets - down payment funds and reserves which can be your funds and in some cases gifts as well- credit - min fico is 580-620 but for best pricing you’ll want to be in the 680 or higher range

Joking aside, someday I want to gift my children real estate.

That can be money if allowed, gift certificates etc.

I'm considering acting as the bank and lending to a sibling who is buying a house.1) Is the interest I receive taxable as interest income, or can it be considered gifts between family members?

You would need gift funds from family/friends or have someone who has the downpayment to sign with you.

Rich family members could give you a gift.

Your father can "gift" you the down payment 

I do mobile homes in Tricities, WA, which is a couple hours away from Spokane. 

Any payments on the balance remaining from the original loan must be included in the debt-to-income ratio calculation for the refinance transaction.Note: Funds received as gifts and used to purchase the property may not be reimbursed with proceeds of the new mortgage loan.The new loan amount can be no more than the actual documented amount of the borrower's initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points on the new mortgage loan (subject to the maximum LTV, CLTV, and HCLTV ratios for the cash-out transaction based on the current appraised value).All other cash-out refinance eligibility requirements are met.