Probably worth getting some professional advice - both you guys and your MIL. There are implications for MIL if she sells property for less than market value for quite a few years (thinking of an unexpected change in circumstances that may require government financial support) so ahe needs to be completely aware of not only how the sale could impact now, but also for aeveral years down the track. Once a contract of sale has been actioned, there would be no financial implication if this for you guys, but given she is your mother in law there would potentially be emotional strain if MIl is impacted later... It sounds like she has decided to give your DH an inheritance of sorts blowhole she is still alive (the equity in the house) - there may also be implications of there are other siblings (again, not so much now, but in the future), which could impact you and dH when things are toughest (after losing his mum) so this is something else to consider - does her will need to altered to state that he gets a smaller share of "stuff" after her death due to this situation. If it's sill left equal shares and she hasn't done similar for other siblings, her will may be contested and that leaves you grieving and facing a court battle with sibiings...

As for you and DH - make a general enquiry at one if the banks. You don't have to sign anything. But they are going to be the best people to tell you what can/will/won't happen with finance, and what their expectations are of you. When you are thinking about purchasing, don't forget to factor in not only mortgage payments, but also rates, house insurance, maintenance expenses etc... Good luck!