Mortgage loan along with a rehab loan. New guy questions

[Mike Cook]

Hey all. So I'm going to bid on a property and spoke to a friend's lender and here are the banks terms. To me, it seems like 2 separate loans that I'd have to bring to closing. Am I way off base here???

Here's the deets.

Bank owned, list is 165k. They're accepting bids and will make the call next week.

We figured it'd be ~80k to get this place rentable. 

Finance guy said this: 

"For a purchase/renovation loan we can loan up to 85% of the purchase price and 85% of the renovation costs. We underwrite each loan on its individual merits so based on underwriting those percentages may change (never going over 85%). When it comes time to order an appraisal, we would need a copy of the renovation budget. The appraisal cost is $400. The appraisal would give an “as is” value and an “as complete” value. Normal attorney fees would apply plus a $749 bank fee. 
Typically, we would set the loan up as interest only during the renovation portion of the loan (not to exceed) six months. The loan would then amortize over 25 years. The term of the loan would be 15 years. Right at this moment, the rate would probably be 8.5%."

So would I need to bring 15% for the price of the house AND another 15% for the rehab? If they're financing 2 loans. I then have 6 month to renovate before the loan 'flips' somehow? To a conventional 15yr fixed @ 8.5?

As I said, I'm new to the REI and financing. Am I understanding this correctly? Am I way off in left field here? Do I need to bring 40k to the table? Can someone explain it like I'm 5?

Thanks for reading.