You will only have one loan. In both cases the funds for renovation are placed in escrow and will be disbursed to you and the contractot you hire when the conmplete the work. If you are being told you will have 2 loans with 2 different rates you are not in either a homepath Reno or 203K.
This shortens the closing time by weeks. Try http://www.cfs-mortgage.com/203k for more information.