Figure out a way around our worst case scenario

[Brittany Magee]

My husband and I were looking to purchase a house in Mountain Home, Arkansas.  He visited the property on Friday and after discussing over the weekend we decided we were going to put in an offer.

However on Sunday tornadoes hit the area and several trees hit the house creating extensive damage.

The home and property was inherited by siblings after family passed away and they are wanting to get rid of it.  The listing agent told us that if insurance offers them enough money they will leave the house as is, instead of repairing the damage.  The house is uninsurable without repairs.

We qualified for the loan with the assumption the house is livable.  And now it's not.

I've heard of 203k loan but don't know anything about the requirements.  We are severely disappointed as this was a dream property for us.  What can we do to still purchase the property? 

Thanks for any feedback.