Again, Id hate to be a monday morning quarterback but ive gambled before and lost my shirt.

I have not priced one out for a client in a couple months but I would suggest that you assume the rate to be about .5% more than a traditional FHA, and assume around $1000-$2000 more in closing costs, which will depend on the rehab budget.Another consideration is that sellers see the 203K loan as a negative when you make offers such that your offer will have the lowest priority even if you offer a great price, unless you are offering on a property that will not qualify for non-rehab financing, or you are the only offer and therefore not competing against other financing types.To answer your other questionsTechnically FHA does not require you to get contractors to do the work, however, I say this ONLY because if you look up the guideline I want you to know of this technically and not discount my other advice. 

@Eric Gamble where did the $85k cash needed come from? 

A 100K property in the Class B category and meeting the 1% guideline! 

if yes, just check their guidelines...commercial or residential property?

These are just general guidelines you would have to consider when analyzing a market.

She's basically gambling that this will vastly increase tourism locally (and our downtown is doing stuff to help this as well) and is investing differently based on this.

Could be that lender's guidelines. 

You won't find a conventional loan with those parameters because it doesn't conform to Fannie/Freddie guidelines.

It was explained to me that those are the fannie mae/freddie mac loan guidelines for a refinance (this is because I received a conventional loan at purchase).