In Chicago, there are only two lenders that I know of that do a 203K loan: Wintrust and Wells Fargo. Make sure you are talking to a lender that does them and not someone that's trying to talk you out of it because they'll lose you as a client to someone else. I'm not saying that's what is going on here, just be aware of it.

It's tough to say without knowing your entire financial picture.

203k loans are a different animal than a conforming loan or even a traditional FHA. I believe 203k loans must be underwritten manually according to FHA's most strict guidelines meaning that your mortgage payment (including taxes and homeowners insurance) cannot exceed 31% of your gross income nor can all of your debts combined exceed 43% of your income.

While a normal FHA loan allows for some leeway because they can utilize automated (computerized) underwriting approvals, I don't believe 203k loans have that same flexibility.

Of course you could always seek a 2nd opinion with another lender, but be careful that you make sure to speak with a 203k expert. It's a tricky program and working with the wrong lender can put you in a bad situation

Best of luck