1. (a) Eligible Projects are limited to:

   1. (1) the Rehabilitation or Reconstruction of existing owner-occupied housing on the same site. The Rehabilitation of a Manufactured Housing Unit (MHU) is not an eligible Project;
   2. (2) the New Construction of site-built housing on the same site to replace an existing owner-occupied MHU;
   3. (3) the replacement of existing owner-occupied housing with an MHU or New Construction of site-built housing on another site contingent upon written approval of the Department;
   4. (4) if housing unit is uninhabitable as a result of disaster or a condemnation order from the unit of local government, or presents an imminent threat to the life, health, or safety of occupants as determined by the local government with jurisdiction over the property, the Household is eligible for the New Construction of site-built housing or an MHU under this section provided the assisted Household documents that the housing unit was previously their Principal Residence through evidence of a homestead exemption from the local taxing jurisdiction and Household certification; or
   5. (5) if allowable under the Notice of Funding Availability (NOFA), the refinance of an existing mortgage meeting the federal requirements at 24 CFR §92.206(b) and any additional requirements in the NOFA.

2. (b) If a housing unit has an existing mortgage loan and Department funds are provided in the form of a loan, the Department will require a first lien if the loan has an outstanding balance that is less than the investment of HOME funds and any of the statements described in paragraphs (1) - (3) of this subsection are true:

   1. (1) a federal affordability period is required; or
   2. (2) any existing mortgage has been in place for less three (3) years from the date the Household applies for assistance; or
   3. (3) the HOME loan is structured as a repayable loan.
3. (c) The Household must be current on any existing mortgage loans or home equity loans. If the Department's assistance is provided in the form of a loan, the property cannot have any existing home equity loan liens.

4. (d) Direct Project Costs, exclusive of Match funds, and are limited to:

   1. (1) Reconstruction and New Construction of site-built housing: the lesser of $78 per square foot or $85,000, or for Households of six or more Persons the lesser of $78 per square foot or $90,000;
   2. (2) replacement with an MHU: $65,000;
   3. (3) rehabilitation that is not Reconstruction: $40,000; and
   4. (4) refinancing of existing mortgages: in addition to the costs limited under paragraphs (1) - (3) of this subsection, the cost to refinance an existing mortgage is limited to $35,000. To qualify, a Household's current total housing payment must be greater than 30 percent of their monthly gross income or their total monthly recurring debt payments must be greater than 45 percent of their gross monthly income.
5. (e) In addition to the Direct Project Costs allowable under subsection (d) of this section, up to $5,000 will be allowed in Direct Project Costs for additional sitework related to accessibility features if the house will be located more than 50 feet from the nearest paved roadway or if the house is being elevated above the floodplain.

6. (f) Project soft costs are limited to:

   1. (1) Reconstruction or New Construction: no more than $9,000 per housing unit;
   2. (2) replacement with an MHU: no more than $3,500 per housing unit;
   3. (3) rehabilitation that is not Reconstruction: $5,000 per housing unit. This limit may be exceeded for lead-based paint remediation and only upon prior approval of the Division Director. The costs of testing and assessments for lead-based paint are not eligible Project soft costs for housing units that are Reconstructed or if the existing housing unit was built after December 31, 1977; and
   4. (4) third-party Project soft costs related to loan closing requirements, such as appraisals, title reports or insurance, tax certificates, recording fees, and surveys are not subject to a maximum per Project.
7. (g) Funds for Administrative costs are limited to no more than 4 percent of the Direct Project Costs, exclusive of Match funds.

8. (h) In the instances described in paragraphs (1) - (4) of this subsection, the assistance to an eligible Household shall be in the form of a loan in the amount of the Direct Project Costs excluding Match funds. If the Household is at or below 60 percent area median family income (AMFI), the loan will be at zero percent interest and include deferral of payment and annual pro-rata forgiveness with a term based on the federal affordability requirements as defined in 24 CFR §92.254. If the Household is above 60 percent AMFI but at or below 80 percent AMFI, the assistance to the Household will be a zero percent interest repayable with a 30-year term.

   1. (1) An MHU being replaced with newly constructed housing (site-built) on the same site;
   2. (2) Any housing unit being replaced on an another site;
   3. (3) Any housing unit that is being relocated out of the floodplain or replaced due to uninhabitability as allowed under subsection (a)(4) of this section; and
   4. (4) Any Project that requires a federal affordability period.
9. (i) For any Project involving refinancing described in subsection (d)(4) of this section, the HOME funds used for refinancing shall be structured as a fully amortizing, repayable loan at zero percent interest. The loan term shall be calculated by setting the total estimated housing payment (including principal, interest, property taxes, insurance, and any other homebuyer assistance), equal to 20 percent of the Household's gross monthly income. The term shall not exceed thirty (30) years. Total debt service (back-end ratio) may not exceed 45 percent. Any Direct Project Costs, exclusive of refinancing costs and Match funds, shall be structured as a deferred, forgivable loan with a 15-year term.
10. (j) In all other instances not described in subsections (h) and (i) of this section, the assistance to an eligible Household may be in the form of a loan or grant agreement in the amount of the Direct Project Costs exclusive of Match funds with an affordability term based on the Household's AMFI as reflected in Figure: 10 TAC §23.31(j).
    Attached Graphic
    
11. (k) To ensure affordability, the Department will impose resale and recapture provisions established in this chapter.
12. (l) For Reconstruction and New Construction, site-built housing units must meet or exceed the 2000 International Residential Code and all applicable local codes and standards. In addition, housing that is Rehabilitated under this chapter must meet the Texas Minimum Construction Standards (TMCS) and all other applicable local codes, rehabilitation standards, ordinances, and zoning ordinances in accordance with this chapter.

Source Note:The provisions of this §23.31 adopted to be effective October 31, 2012, 37 TexReg 8482; amended to be effective June 2, 2013, 38 TexReg 3334.