FHA is not limited to a first time homebuyer if that is what you are asking. Owning a rental property does not necessarily keep you from getting an owner occupied FHA mortgage if you qualify for it. The second loan application will question the rental property income:
When using current leases to analyze rental income, the borrower can provide a current signed lease or other rental agreement for a property that was acquired since the last income tax filing, and is not shown on Schedule E. In order to calculate the rental income:
Reduce the gross amount by 25% (or the percentage developed by the jurisdictional HOC) for vacancies and maintenance Subtract PITI and any homeownerâ€™s association dues, and Apply the resulting amount to income, if positive, or recurring debts, if negative.... more
Robin- on a conventional loan for a second residence (as all three adult children already have a primary residence there is no requirement that I am aware of requiring them to live in the residence.
The life estate is created after the fact with the help of a Real Estate Attorney.
The other option is an Illinois Land Trust in which the children are trustees. (also created with the help of an attorney) We have seen these becoming more common as well and they can be financed suvccessfully as I have also seen.... more