The other FHA option is to do an FHA 203k loan which allows you to roll the costs to get the house up to FHA minimum standard into your mortgage. This is what my wife and I did. We bought a foreclosed house in northern Columbia Heights in December 2011. The house was not up to FHA standards, so we used a 203k loan to do some renovations (including the nitpicky things FHA is concerned about). A 203k is time consuming and bureaucratic, but well worth the hassle if you can stay on top of the process. The most challenging part of a 203k is that many lenders don’t support this type of loan due to the extra work required on their side. That said, there are some out there.