It doesn't matter if she is paying a mortgage on her home or if it is paid off, occupancy is occupancy. Generally speaking if she is not going to occupy the property she would apply for a second home mortgage, or as an investment property, depending on the circumstance...
But there are ways to do it as owner occupied, such as you buying and have her be the non-occupant co-borrower, as described in many of the posts below, this is known as FHA's "Kiddie Condo" mortgage (note: it doesn't have to be a condo).
There is also another, lesser known, program where a parent can purchase a home for a child with a conventional loan too. The guidelines are pretty rigid but it can be done depending on scenario. The major difference in this loan is the child is not on the loan at all, only the parent is. It also requires a larger down payment as it is conventional, and the parent has to qualify for both payments (if they have their own housing payment) on their own income, none of the child's income can be used as they are not an applicant on the loan.