I'd like to help you, but I can't go below 620. Even if I could, it may not be the best thing for you. You typically see higher rates/fees with scores below 640, and you'll often run in to higher down payment requirements as well.
My suggetion would be to talk to a housing counselor who help you get your credit and finances "mortgage ready" and then refer you to a lender that meets your needs.
I've included a link to a site to find a prepurchase housing counselor in your area.
This can be a bad situation waiting to happen. Your parents are obviously emotionally attached to their home but that is no reason you should have to overpay or spend money on repairs - especially items that are "deferred maintenance". Family dynamics can be very tricky and it is difficult to make everyone happy.
In the end, the property has to appraise in order for the lender to give you a mortgage. Interview real estate agents and ask them to prepare a market analysis which compares recent sales of similar homes. If their asking price is over and above the market, you might be better off finding something else. There is a FHA product (203K rehab loan) that allows for repairs, but there are lots of hoops to jump through and generally the interest rates are a little higher.
Personally, I avoid doing deals with family because I don't want there to be any hurt feelings or uncomfortable Thanksgiving dinners. Sometimes it is better to keep family and business separate.
I don't mean to be rude, but this is more of question of family dynamics - I wonder what Dr Phil, Ann Landers, or Dear Abby would say?... more
I am not a loan officer but I would think interest rates will be higher in 5 or 7 years? Does not seem like a good choice if you plan on still living in the home after the rate adjustment.
Most people don't consider inflation when borrowing and looking at interest rates, but investors sure do. I would think the 30 year is the best route and then if you want just do extra payments if that makes you comfortable.