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Under the 2016 MAP Guide, the cap rate cannot be lower than the debt service constant with MIP.

2020 MAP Guide: no more rule, just an admonition: “Capitalization rates should generally exceed the constant in nearly all cases” says the 2020 MAP Guide. But look to this being largely ignored and in any case (a) with these super-low interest rates the debt service constants are quite low, and (b) application can be made with a below-market interest rate and then after firm commitment raised by up to 50 bps without causing reprocessing at a new cap rate.

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