(1) In addition to amounts otherwise authorized, an acquiring agency shall make a payment to or for any displaced person displaced from a dwelling not eligible to receive a payment under section 903 (relating to replacement housing for homeowners), which dwelling was actually and lawfully occupied by the displaced person for not less than 90 days prior to the initiation of negotiations for acquisition of the dwelling or the receipt of written notice from the acquiring agency of intent to acquire or order to vacate. The payment shall be the amount determined to be necessary to enable the displaced person to lease a comparable replacement dwelling for a period not to exceed 42 months. The amount shall be the additional amount, if any, over the actual rental or fair rental value of the acquired dwelling, but not more than $7,200.

(2) Any person eligible for a payment under paragraph (1) may elect to apply the payment to a down payment on, and other incidental expenses pursuant to, the purchase of a decent, safe and sanitary replacement dwelling.