We have checked the psi it reads 40 then when toilet is flushed and try washing your hands we lose all pressure however when we check the pressure it reads 60... what to do?

Looks like you have undersized pipes. Your sink supply is connected to toilet supply, therefore, when you flush, toilet has higher demand for water overpowering water supply to the sink. There are 2 things you can do to improve water flow to the sink:
1. Increase water pressure until you are satisfied with water flow in the sink
2. Re-pipe the sink. Connect sink supply to at least 3/4" pipe under the house.
Back to you. Milo