Hi Tiffany -
The main issue is that lenders are suspicious of any second home purchased within 50 miles of your primary residence. That's fairly close for a vacation property, so they are wary that you may plan to rent it out without telling them. So they assume it's an investment property.
You can still go ahead and buy the home for your parents, but expect to pay a higher interest rate and be required to make a larger down payment than you would for a home more than 50 miles away.
On the other hand, if they aren't paying you any rent, you may still be able to deduct the mortgage interest - the rule is that a couple filing jointly can deduct the interest on up to $1 million in mortgage debt used to purchase a primary and secondary residence, and an additional $100,000 in home improvement loans on the two properties.
The easiest solution might be to see if you can find a home for your parents more than 50 miles away, unless there's a specific community they want to live in.