Ask your realtor for a referral to a mortgage broker or banker. Should have already done so for pre-approval, anyway. That way you can get your loan/down payment questions answered. The tax questions are best left to a CPA.

Got it, thanks

This isn't related to the money aspect, but equally if not more important. In considering the ramifications of living under one roof, are you prepared to be full-time caretakers in 20-30 years? If they need someone with them 24/7 and have significant medical needs or some serious impairments to deal with, how would you manage it? What if it became impossible to keep one of them with you in your home? Would funds be available to assure quality care in such a circumstance?

Multigenerational families living under one roof can be a wonderful experience for all, but certain challenges also arise. Just be sure to spend as much thought and planning on how various scenarios can and will be handled as you do planning and building your home and figuring out the financing for it.

Great points, thank you for the comments and definitely things we need to discuss. A big part of the reasoning on having them live with us is to get them out of their house. Our town does not have a 55 or older community which stinks. 2 bedroom condos go for close to what some SF homes are going for, it is unreal. At their age they should be enjoying life and being with their grandkids, not maintaining a house. If my dad was one that enjoyed doing that as I do, that would be different. But he hates it.

Just another reason why I love this site, you guys provide so much information. Thank you so much for your comments/suggestions. We are going to discuss all of this an then some this coming weekend between the 4 of us now, but there is no doubt that if we decide to move forward a good plan is in order.

It looks as though the expected life span of the two couples is quite different.

What would need to be done when there needs to be a major change in lifestyle, due to, probably, one or both of the seniors needing care, or dying?

Would it be better to have the younger one(s) be the owners, with the seniors having loaned the money, or made another plan, as there could be revaluations of the property when one/both of the seniors move to assisted living, or pass away, including tax consequences?

Would the ongoing owners be able/willing to provide the value to the person departing to receive needed care?

The issue of whether there may be more family members has a substantial bearing on the situation, as well.

You need to do some serious and complex thinking about what you'd need to do, and be able to, in case of various eventualities

ole joyful

Reading IRS guidance on tax exempt gift limits, your parents could (notice I'm not necessarily advising SHOULD) gift you and your fiance more than $14,000. They could each gift you $14,000 and each gift your fiance $14,000, for a total of $56,000.

Issues of joint ownership with a non-spouse, already mentioned, as well as this potential gift, need to be carefully considered.

Just to clarify, the $14,000 is a gift exclusion for tax purposes, it is not a tax exempt gift limit. Gifts of $14,000 or below do not trigger form 709. Gifts amounts greater than $14,000 trigger form 709 and are taxable, but those taxes may be exempted by using the $5.43 million lifetime estate and gift tax exemption. Essentially, this means that you can give any number of people $14,000 per year and another $5.43 million over your lifetime (and death) without triggering a tax penalty.

Thanks guys. We have all discussed this and while there are some real benefits of doing it, we have all decided to not move forward with purchasing the house. Thanks again all.

For whatever the reasons, the right outcome.

Hopefully what pushed this decision was the realization of the inherent problems of the suggested arrangement and not the specifics of the the unique property.