Question

we lived in our ancestral house (use noun form of ancestral)

Answer 1

Noun of ancestral is 'ancestor'. 

So the use of noun form of the word 'ancestral' should be as shown below:

We lived in the house of our ancestors.

Or

We lived in our ancestors' house.

Or

It was in our ancestors' house that we lived in.

Or

We lived in the house that belonged to our ancestors.