If you and the wife combined make $10,000 a month, figure your total obligations shouldn't top $4,500 a month.

@Kole Kingslien  Guidelines for land contract:- Payoff of Installment Land Contract Requirements When the proceeds of a mortgage loan are used to pay off the outstanding balance on aninstallment land contract (also known as contract or bond for deed) that was executed within the12 months preceding the date of the loan application, Fannie Mae will consider the mortgageloan to be a purchase money mortgage loan.The LTV ratio for the mortgage loan must be determined by dividing the new loan amount by thelesser of the total acquisition cost (defined as the purchase price indicated in the land contract,plus any costs the purchaser incurs for rehabilitation, renovation, or energy conservationimprovements) or the appraised value of the property at the time the new mortgage loan isclosed.

So other than risk, what is the reason for using a HML for the total 130K, instead of using my own HELOC/savings for the 130K?  

@Eric C.It would not hurt your ability to borrow as it is still counted towards your total earned income (you earned it), you are just tax deferring it in a retirement account.

Rent is 550 a month so 1650 a month total for the 3.

I'm curious how I can deduct this from the tenants security deposit?  

The home it self is need of a total remodel.

They both insist that there are creative ways to structure this deal so that me and my mother can LEGALLY , and secured by CONRACT, be able to collect the net proceeds, and split it 50/50 as her and I agreed from the start.One of the proposed arrangements I researched and sought legal consul for, and am fairly certain would in fact still be an act of fraud.A broker brought in an investor who proposed the idea of purchasing the Mortgage Note, and giving us the difference, secured of course in advance by a contract where we would agree to forfeit the Security(house) once the note was purchased. 

@Brent Coombs that's where my head is at too with the $210k in total.

I had a applicant like that who started demanding repainting the kitchen because they didn’t like the color, demanded I lower my security deposit as they felt it was unnecessarily high and wanted a bit lower rent because it was off season.