The HOME regulations allow HOME funds to be used for a variety of project-related soft costs.

Soft costs include the following:

• Relocation costs. Relocation requirements apply to all units in a HOME-assisted project if the investment of HOME funds causes displacement.
• Refinancing. HOME funds may be used to refinance existing debt for:

1. Single-family, owner-occupied properties in connection with HOME-funded rehabilitation and if necessary to reduce the owner's overall housing costs and make the housing more affordable.
2. Multi-family projects being rehabilitated with HOME funds, if the refinancing is necessary to permit or continue long-term.

• Refinancing may not be the sole purpose of the HOME investment, and refinancing for the purpose of taking out equity is not permitted.

Capitalization of project reserves. HOME funds may be used to fund an initial operating deficit reserve for new construction and rehabilitation projects for the initial rent-up period. This reserve is meant to meet any shortfall in project income during the project's rent-up period. The reserve can be used only for project operating expenses, scheduled payments to replacement reserves, and debt service.

• The reserve cannot exceed 18 months. Reserves remaining at the end of 18 months may be retained for reserves at the PJ's discretion. The disposition of any remaining funds at the end of the 18-month period should be determined in the agreement between the developer/owner and the PJ.

Other project-related soft costs. HOME funds can be used to cover the soft costs associated with a project as long as they are reasonable and necessary to the project. Examples of other eligible project soft costs include:

• Financing fees and other finance-related costs;
• Title binders and insurance;
• Recordation fees and transaction taxes;
• Legal and accounting fees;
• Surety fees;
• Environmental reviews;
• Appraisals;
• Architectural, engineering, and related professional services;
• Builders and developers fees;
• Tenant and homebuyer counseling, provided the recipient of counseling ultimately becomes the tenant or owner of a HOME-assisted unit;
• Project audit costs;
• Affirmative marketing and fair housing services to prospective tenants or owners of an assisted project; and
• PJ staff costs directly related to projects (not including TBRA).