### Question
How is the "actual cost" defined?


### Answer
The term **actual cost** is defined in *12 U.S.C. § 1715k* as follows -

> the cost to the borrower of the improvement, including the amounts paid for labor, materials, construction contracts, off-site public utilities, streets, organization and legal expenses, such allocations of general overhead items as are acceptable to the Secretary, and other items of expense approved by the Secretary, plus a reasonable allowance for builder's profit if the borrower is also the builder, as defined by the Secretary, and excluding the amount of any kickbacks, rebates, or trade discounts received in connection with the improvement

#### Citation:
  - *12 U.S.C. § 1715k*
  - Heading: **CHAPTER 13-NATIONAL HOUSING > SUBCHAPTER II-MORTGAGE INSURANCE**

