Help, low appraisal ( I am the buyer) ruining my plan.

[Samuel Carmichael]

I have a house under contract as a first time home buyer. 

No money down with Rhode Islands Renewal Program. 
They give you a 20,000 grant to buy a foreclosure. 

Right now I am 1360 dollars into the deal. 

Keywords: Rhode Island, Pawtucket, FHA, Creative Financing, Foreclosure, REO.

Forclosure sale price   170,000

My offer      152,000

Closing costs included. 

+20,000 down payment 

------------------------------

132,000

Here is the problem the appraisal came back today, and although the property needs minor work...it was only 158,000. This property sold for a high in 07 of 215,000, and in 2003 for 195,000. 

I was hoping to buy with 50,000 In equity minimum, and right now even with my 132,000 I am up against a whopping 26,000 in equity only. which doesn't fit into my investment plan at all. 

What should I do? 

I am down to the wire, and only bigger pockets can help.