There is a house that was built in 1850 that I would like to have but it needs a lot of work. There was a septic tank but it has gotten beyond use and the city said since there is a sewer line very close the property can't have another septic tank. But that part of the public sewer is a force main so the place will need a pump and someone to tie into the public system costing an extra $10K or so. It also needs a furnace. There is a baseboard system through the 2 story house with 2 zones and most of that is hopefully still in ok condition but it needs a furnace and to be tied in to the baseboard system. It needs a water heater and liner for the chimney. Also the windows are old and let some cold air get in and some panes are broken. It is a foreclosure so owned by a bank. Every room needs cosmetic work. All of the carpet has been removed.
But! The location is fantastic for my personal interests and the house itself would also be very good if/when finally put back into decent condition (the previous occupants not only didn't improve the property but put it in worse condition). I have recently moved here from a different state and would like to make this place my home, but have been unable to find a lender who is willing to help. I have been pre-approved by a couple of lending agencies but they don't want to get involved with a place that needs this type of work.
I have read things that lead me to believe with an FHA 203(k) you can get a mortgage and also borrow additional money for making repairs and you can also do repairs yourself. One person in this seemingly hopeless journey said you can do some work yourself but you can't buy materials and do work yourself with money associated with the loan...that all of the work done with money from the loan must be done by a contractor. Later is seems they begin to change their tune and say that every bit of the work done to the place must be done by a contractor.
What I from my naive and ignorant pov would like to do would be to get the purchase price of $45K-$50K and borrow an additional $30K-$35K not going over $80K total. Then have contractors do the work I can't do like tie in the sewer, install a furnace and install a water heater, chimney liner and whatever else to use up the additional borrowed amount and get the place livable. Then move in and continue fixing the place up myself. But nooooo.... the places all end up saying that every bit of all repairs must be done in the most expensive way possible by contractors including work you could do yourself. Forcing people to do everything in the most expensive way at a time when they are most interested in trying to save money by doing work themselves and want!!! to do what work they can for themselves because supposedly it is their!!! house. But as I said, nooooo.... the lenders will not allow. So am I missing something and there really is a way to do this from my position--I've been pre-approved by 3 places already--or is my interpretation correct and there's no way a person in my position can borrow the money, get it livable using contractors and then move in and finish getting things the way he wants them himself?
Thank you for any help or suggestions!