Deshone Drummond another thing to consider when dealing with FHA 203k is the payout to the contractors. FHA will only disburse funds a certain number of times (based on the size of the project) and they also require an inspection for each disbursement. What this means is you may have to get your contractors to agree to some specific payment plans, and you might have to lump payment for separate jobs into the same disbursement. Also you have to pay for each inspection accompanying each disbursement. They want to inspect the completed work to make sure they aren't just throwing the rehab money into your vacation fund.
For example you may have to lump the roofing contractors payment in with the electricians and have the inspector inspect them both before cutting the check. That sounds OK to you, but how do you explain to the electrician that he can't get paid until the roof is done? Just something to watch out for if you are putting together a team of contractors not being handled by a GC.
Also I second what Jonathan said - don't get a 203k from a lender who isn't very familiar with them. They have special requirements that you don't want to hold you up or catch you unawares. FHA loans can also scare the seller as the FHA inspector can be as anal as he wants and delay the whole process over something like chipping paint on a windowsill that the seller must fix prior to lender approval.
That said, being able to leverage the rehab money out of the lender is quite nice and on certain loan types you can get a ton of money (provided you can prove it with invoices, and you are not doing structural modifications, or whatever the requirements of the loan type are).
