12.16 ELIGIBLE LOAN COSTS (05/17/17)

Owned by Kacey Olson
Nov 17, 2018
2 min read

© RHS HB-1-3555 SFH Guaranteed Loan Program Technical Handbook

The loan will be used to finance the construction of a new single family housing residence, which can include modular and manufactured home construction. Condominiums are ineligible for this type of loan feature, however, site condominiums meeting the criteria of Section 12.11 A (2) of this Chapter may be eligible to utilize with the construction to permanent loan product feature. Loan costs which may be included in the loan amount are subject to the maximum loan to value and will be reasonable and customary construction costs such as:

Land

  • Acquisition cost of the land;
  • Payoff the balance of land to be utilized in the construction of the dwelling.

Construction Hard Costs

  • Costs inside the contract to be detailed on the construction budget agreed upon by the builder and borrower;
  • Costs outside of the contract, paid to subcontractors, for contributive work such as well and septic installation, roads/driveways, utility hookups, landscaping, etc.

Construction Soft Costs

  • Appraisal fees
  • Inspection fees
  • Survey
  • Permits
  • Plan review fees
  • Architecture or design fees
  • Engineering fees
  • Title updates
  • Lender construction administration fees
  • Contingency reserve
  • Interest reserve
  • Project review fees
  • Builder acceptance or review fees
  • Tax and insurance reserve

Other reasonable and customary closing costs are allowable as defined in Chapter 6 of this Handbook, as long as the costs do not exceed the maximum loan to value described in Chapter 7.

Any item included in the cost to construct the home must be commonly and customarily included in the cost to construct other homes in the area where the subject property is located. A contingency reserve to cover eligible expenses associated with unplanned problems with construction or change orders may be utilized. If used, the reserve is limited to 10% of the cost of construction (including labor, materials and soft costs). Reserve funds must be deposited into the construction escrow account. The cost to construct must not include items such as furniture, electronic and home entertainment equipment or other personal items.