No you couldn't. You can't afford 500k. The only value is what someone is willing to loan against the value of a asset.\
And it you could put in a 100 thousand dollars and get a million back on the property you could be an idiot not to do that. Invest in some properties that will appreciate at a greater rate.
No, really. The house is worth a lot of money. Like Kruz just said. His friend bought a .27 acre lot for $400K in Downers. Here we have a full acre, pond in the back yard with 2 islands (the neighbors backyards and ours intersect over the pond, about half of it being on our lot). Wooded area around. On my block they just took down a house and put to mansions about 10 feet apart from each other on the same lot. Listed em' at $950K a piece, with no land basically (not sure what they sold for, though they sold right after the bust, so I'm sure a lot less). Anyway, land is valuable. Especially in towns like Downers. Add to the fact that you have a house with 2 floors, full finished basement (2 kitchens, 5 bedrooms, study/library, amazing architecure, 3 fireplaces, etc. etc...and you have an expensive house...worth more then a $300k selling price). So I believe we could.
On the topic of investing and selling it...that's not some people's cup of tee. I grew up in this house. I love this. Its got everything I would ever want in a house and more, plus great location. If you can hold onto something like that for a cheap price...why wouldn't you? Giving up the house for a $1,000,000 to me wouldn't be worth it. Now if someone offered $10,000,000, we might talk...but its not always just about money.
And FYI for anyone interested. Two seperate loan officers and 1 realtor that I talked to all agreed that purchasing this house at $300K, even if its worth more is totally possible and legal...especially that we're family. If it was stranger to stranger, they all said there would be some expaining to do, family is a done deal.
And of course, yes, you do pay your taxes on what the village or whatever feels it's worth.
Congrats on your new place btw.