A 203 K mortgage is usually a short term LOAN, because it involves added risk for both the bank and the buyer. If done right the buyer will gain immediate equity in the property of 15 to 20% by the time the work is completed.
This being the case, these loans are refinanced within the first 12 to 24 months after being obtained. This short period of time doesn't allow the bank to recoup expenses (securitization and commissions paid) associated with the loan, so to make the loan more profitable they pass on costs to the borrower.
To defer these costs, I suggest you request a sellers concession, up to the maximum 6% of the purchase price to help pay for closing, thus limiting the money coming out of pocket and instead financing it.
The 203k program is the best on the market to purchase and renovate an owner-occupied property. In this current financial crisis it is going to be hard to find any real competition.