Page 243
12.15 ELIGIBLE LOAN COSTS
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, including detached condominiums and site condominiums, are ineligible for this type of loan feature.
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
Page 244
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 reserve account. The cost to construct must not include items such as furniture, electronic and home entertainment equipment, or other personal items.
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
x Acquisition cost of the land; and
x Payoff the balance of land to be utilized in the construction of the dwelling. Construction Hard Costs
x Costs inside the contract to be detailed on the construction budget agreed upon by
the builder and borrower; and x 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
x Appraisal fees
x Inspection fees
x Survey
x Permit plan review fees
x Architecture or design fees
x Engineering fees
x Title updates
Page 245
x Lender construction administration fees
x Contingency reserve
x Interest reserve, including interim interest as accrued during the construction
period on a warehouse line of credit up to 12 months x Principal, interest, taxes, and insurance (PITI) payment reserve up to 12 months
x Project review fees
x Builder acceptance or review fees
x 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. 12.16 PLAN AND THERMAL CERTIFICATION