Perhaps I'm mistaken, but the map on this website indicates properties may be ineligable for USDA rural development loans in the 48197 zip code. http://eligibility.sc.egov.usda.gov/eligibility/eligibilityA
I suggest entering the actual property address below the map.
No, Rural Development loans cannot be used for improvement. The home needs to be inhabitable and free of health and safety hazards prior to moving in.
203k is really all there is out there for a low down payment on a home needing repairs.
If you are concerned about down payment and you are using FHA 203k then you should be aware that after Jan 1st the required down payment is getting bumped up to 3.5%. This means you would need to have an offer accepted, a loan locked in, and an FHA case number assigned prior to Jan 1.
If you're doing 203k then you dont have a lot of time left since you'll probably need to get all your builder estimates and everything early in the process