The Standard 203(k) Rehabilitation Mortgage Insurance Program may be used for reconstructing a structure that has been or will be demolished, provided the complete existing foundation system is not affected and will still be used. Prior to reconstruction of the structure, the Consultant must obtain from the borrower a report from a licensed structural engineer stating that the foundation is structurally sound and capable of supporting the proposed construction of the structure.
The Limited 203(k) may NOT be used for reconstructing a structure that has been or will be demolished.
For more information see Handbook 4000.1 II.A.8.a.vi.(A)(1); II.A.8.a.vii.(B); II.A.9.d.iii.(B)at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh