All perfect praise be to Allaah, The Lord of the worlds. I testify that there is none worthy of worship except Allaah and that Muhammad is His slave and Messenger.
First of all, we ask Allaah to reward you and your wife for being keen on doing what is lawful and avoiding what is forbidden. So may Allaah enable you to do that which is good and increase His blessings upon you, as He is near and He answers the supplications.
Indeed, you did well by advising your father not to buy the house with an interest-based loan, as this would constitute helping in the consumption of interest; and please refer to fatwa 82102.
You should both keep trying to discourage your father from doing this and not lose hope in doing so. This is in addition to supplicating Allaah earnestly to drive his heart away from this matter, and it is very easy for Allaah to do so. If your father insists and buys the house with interest, then he is sinful and is obliged to repent.
However, his sin in buying the house with interest does not mean that it is not valid for him to buy the house. Buying this house is valid and it becomes his property because the prohibition of taking a loan with interest is related to the person’s liability, and not to what is bought by the loan. For more benefit, please refer to fatwa 310777.
Therefore, it is permissible for him to benefit from this house. Since it is permissible for him to benefit from it, then it becomes more appropriate that it is lawful for other people than him to benefit from it. Hence, it is permissible for you to live with him in this house, and it is permissible for you to accept his gift if he gifts it to you when he is in sound health, provided that it is not done out of favoring you with this gift over the rest of your siblings, if there are any, because being just when gifting gifts to the children is an obligation, as it was mentioned in the hadeeth: “Fear Allaah, and be just when gifting your children.” [Al-Bukhari and Muslim]
Allaah knows best.