Home loan or what should i do?

my brother in law wants a house but since he is self employed only for 7 months he cant get a loan in illinois so we were going to take a home loan out for him but not sure if that is the best type of loan the house is only 50,000. Our house is paid off is it better to use that as collateral what would you do?? I know they will make the payments that is not an issue.