FHA 203k loan on a 2 unit 100 year old 2 flat - need advise

[Joan Riano]

I recently got an offer accepted for a 2 unit property in Elgin, IL.  Its a 5 bed 3 bath.  The offer got accepted for $125k with 5k in credit from the seller at closing (essentially $120K) I'm trying to use a 203k streamline loan which means I could spent 30k in renovations.  The upstairs is currently rented for $825 a month (which is low, most 2 beds in the area rent for $1000) and the tenant has lived in the property for over 5 years with her husband and son and would like to stay.

did the inspection on it and as expected for an 100 year old house, there are many things wrong with the building.  A few of the main issues... the house has settled and floors are uneven everywhere. It was also brought to my attention during the inspection that the upper unit currently rented only has one entrance/exit and that fha regulation requires 2 entry ways for a second level unit.  I called the lender and she confirmed with the fha appraiser that it needs a second entry way.  

I wasn't planning on doing a crazy rehab on the property per say.  I wanted to fix the front porch which is about to fall, refinish wood floors, paint and maybe rehab the tenants bathroom that is in bad shape.  Well after getting a couple estimates from contractors it seems that adding an entrance will run no lower than 10k that plus 5k from the porch its already half my budget in only two things.  I also have to replace a few windows and doors, cut a tree too close to the power lines, and I'm sure other expenses I haven't even seen yet.  

Also found out the property is part of the historical district which means I would need to get permits, present plans and wait for approvals from the city.  All that plus all the run around from the bank and contractors for 203k loans.  

The bank has not done the appraisal yet which will determine if the property meets the minimum fha requirements and if there is enough equity to go with the 203k loan.

I have been searching fha minimum property requirements in the hud website and did not see anything about 2 entry ways anywhere.  I did see they might have a problem with the foundation settling.

Any FHA experts, fha appraisers in the forums that could give me some guidance? I'm already $1600 into this property $600 home inspection and $1000 earnest money. I would hate to pay for an appraisal to find out I can't get the loan.