Work should be completed by a Certified 203k Contractor, who can verify their knowledge, understanding and competency with the 203k. Go to the 203k Contractor Directory at http://203kContractors.com. There's also a great FAQ section on that site as well.
I just received my FHA 203k specialist designation. I would be happy to answer your questions if I can. Basically a 203k loan is one loan that provides funding for both the purchase of the home and the renovations. There are two types of 203k loans, the streamlined loan, in which the maximum amount set aside for renovations is $35,000 and the full 203k loan, for which the loan limits are the same as all other FHA loan limits. There are some limitations on the types of renovations that can be done with the streamlined version, such as structural changes, but otherwise it is quite flexible. I really think it is a fantastic product that will enable ordinary home buyers to purchase Bank Owned homes, Short Sales and other distressed properties that provide a very good deal and still be able to upgrade those homes with little or no out of pocket expenses.
You can feel free to contact me here on Trulia if you have other questions. I am here to help!