Your mechanic is correct, and they are smart to warn you of the potential issues before deciding on repairing your vehicle. Head gaskets are a fairly common repair on many vehicles after the engines have 100,000 or so, some occur even earlier. Unless you overheated the engine badly, the engine is not likely cracked, but only a tear down and inspection will determine that.
Ask your mechanic to present you with an estimate for a tear down and inspection with and without the head gasket replacement, and for the worst case scenario, and new/used engine replacement.