Help needed in purchasing mother's house

[CanEye]

Wisconsin

We've had to move my 83 year young mother from her house to independent living recently. She now needs to sell her 45 year old house which she does not owe anything on. She obviously would like to get as much as she can for it.
The house is currently assessed at $186,000 and is in need of some repair - it already has a new roof and a fairly new furnace (6 years old?) and assumes she may have to take a hit on it due to these other repairs. Property is not selling well right now of course, even here in Madison, WI. We are assuming she may take a hit on it and get less then the assessed value due to the repairs and current market.
I would like to purchase the house. This would be my first housing purchase and qualify for WHEDA and FHA. I 'm approved for $120,000 with an FHA loan (I know, not very much). The mortgage lender mentioned a gifting of a down payment of 20% as an option. I don't want my mother to take too much, if any of a loss so am uneasy about asking her to do this.

Are there any suggestions or ideas that someone could offer? Any creative financing options without her being taken advantage of. Please include any tax implications with your ideas. Very much appreciated and thank you so very, very much!

[Ozark_Sophist]

Another consideration is if mother will need assistance from Medicaid to pay for her long term care within five years. If that is the case, the purchase price must be fair market value (or within 85% of the FMV if my memory serves me correctly) and the 20% gift downpayment will impact her ability to get Medicaid.

[dmiller12]

If you're only able to qualify for $120,000 it probably means you can't afford to pay the full market value for this home.

Do you have siblings or other family members that would assist you (co-sign) on the loan to help you qualify?

Unfortunately there are not a lot of creative financing options available in this post sub-prime meltdown market and for good reason.

[CharlotteInvest]

there are a few ways you could do this. first you would pay full market value for the house then your mother will gift you the 20% down payment which would be fair since the house needs repairs. Then that would leave a balance of around $148,000 your mother would take back a second mortgage for the $28,000 allowing you to get a loan of $120,000.
If you are worried about medicaid, have your mom place the property in a trust, and have the trustee sale you place and your mom would receive her money as a beneficiary of the trust. Leave all the money in the trust and the trust can directly pay all of her bills.