Are there any first-time home buyer mortgage loans that do not disqualify someone who is gifted part (1/8) of their parent's house in a life estate?

[wind10song]

Kansas
Are there any first-time home buyer mortgage loans that do not disqualify someone who is gifted part (1/8) of their parent's house in a life estate?
I am 63 years old, and have never in my life spent one single penny to buy a house. I always rented, even from my mother during the last 15 years of her life when she needed someone to live with her because of poor health. She died last year and I finally decided I want to buy her house. The two deciding factors were that it will cost me about the same every month to rent, and that I thought I would benefit as a first-time home buyer. The bank says I can't qualify because technically I own 1/8 of the house already. My parents deeded the house to us 8 kids in 1995 in a life estate. That is the only inheritance they left us, to be divided equally.
Sedgwick County in Kansas currently values the house at $154,000. Medicaid has a $33,000 lien on it. If we were to sell it to an outsider, it needs about $15,000 worth of upgrade to the AC and septic systems. It's a rural home in good shape in a good school district. I was really hoping to qualify for a USDA loan. I am single and only make $38,000 a year. My 1/8 of the proceeds likely is only about $12,000. How can $12,000 worth of real estate label me a home owner? I could understand if I owned half or a third of the house. In that case I probably wouldn't need to apply for a home loan. I am the kind of person that first-time home buyer loans were designed for. My sister has a co-worker who knows someone who was able to get one while being listed in a life estate. Do those exist, and where can I tell my banker to look for one? Any online research I've tried to do myself has just left me confused. I would be so grateful for any help.

 

[Taxing Matters]

When she died the life estate ended. The 8 of you as remainderpersons then each ended up with owning 1/8 of the house. In short, all 8 of you are now co-owners of the house and thus each of you is an owner of the house. That might disqualify you from at least some first time homeowner programs depending on exactly how they define first-time homeowner. But it should help you with getting a regular mortgage to buy out your siblings since it will reduce your need for a down payment on the loan. Just keep checking with different lenders to see which ones will lend to you and what the terms of the mortgage would be.

 

[FlyingRon]

USDA doesn't have a first time homeowner provision. Kansas does, but indeed owning a home in the past three years before applying disqualifies you. I've not delved deeply into the program requirements but there also seems to be an income test. This is sort of a double edged sword because you still have to qualify for the first mortgage, the KHRC is down payment assistance. You should probably talk to a few banks in your area who will know more whether you can qualify or not.

 

[adjusterjack]

My parents deeded the house to us 8 kids

How is your relationship with your 7 siblings? Depending on your answer I may have an idea.