First, legal help will have to come through a real estate attorny and/or a title company. The latter can provide you an explanation of the various way to vest a real estate property. I recommend talking to your respective tax consultants also. How you are going to take title and how you want to divide ownership is something that a borrower has to provide to me (as a mortgage professional), not the other way around. Now, I can tell you what will work and what doesn't, but I cannot give you legal advice.
For example, if you are going to be part of the finanaing on the property, you are going to have to be on title prior to closing of the new loan. A quit claim will accomplish that. Then financing proceeds pretty much as normal.
What is the current and extimated future value of the property (and/or expected loan amount)? A FHA 203K renovation loan could very well be the perfect loan product for this situation (and, certainly less expensive than a construction loan). However, FHA has loan limits that may not cover your project (around 729K in the Bay Area). If your projected loan amount is within FHA paramenters I can provide volumes of information about the 203K (either via blog posts or phone call). The program is not that complicated, but there are too many variables to cover in a advice forum. Just let me know if you want further info on the program.... more