Type of Loans. Loans made or purchased by the Administration under its Special Housing Opportunities Program, the proceeds of which are to be used to refinance, acquire, construct, or rehabilitate a project are eligible for mortgage insurance from the Fund. Interest. Loans shall bear interest at not more than the rate approved by the Fund. The Fund may not insure a loan that provides for an increased interest rate upon default. Payment. A sponsor is required to repay the loan in equal monthly payments of interest and principal in order that the loan is fully amortized over its term, except that if the term exceeds 30 years in accordance with §D of this regulation then, at the direction of the Administration, a sponsor may make initial payments of interest only for up to 18 months after the loan closing. Term. Loans for permanent financing of projects shall contain amortization provisions satisfactory to the Fund for the complete amortization of the loan in monthly installments in 30 years or less, except that if the project is funded initially from a source other than proceeds of revenue bonds, then, at the direction of the Administration, a sponsor may make initial monthly payments of interest only for up to 18 months after the loan closing, followed by monthly principal and interest payments that will fully amortize the loan over a term of 30 years. Loans for construction or rehabilitation financing of projects are eligible for insurance of advances by the Fund. Insurance of construction loans is conditioned upon the existence of a commitment for permanent financing which is acceptable to the Fund. Liens. The loan shall be secured by a mortgage or deed of trust. The mortgage shall be a first lien on: The land and improvements; or A leasehold interest in the land and improvements which extends at least 25 years beyond the term of the loan. The Administration may permit subordinate liens for other loans made by the Department or other lenders. Additional Security. The Fund may require the following additional instruments or guarantees securing an insured loan: For projects involving new construction or substantial rehabilitation: Payment and performance bonds each in an amount equal to 100 percent of the contract price, Cash or an irrevocable letter of credit equal to 50 percent of the contract price; or Other completion assurance as may be acceptable to the Fund; and Such other sureties or guarantees of the loan as may be determined necessary by the Fund. Assumption and Prepayment. Loans insured by the Fund under the Program may not be assumed by another sponsor without the prior written approval of the Fund. Loans may be prepaid only to the extent permitted in the loan documents.