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.

Greg Hunter Changed status to publish March 16, 2021
Copyright © 2021 HUD221d4.com. HUD221d4.com is a PHA Capital company. This website is owned by a private company that offers business advice, information and other services related to multifamily, commercial real estate and other financing. We do not provide legal, accounting, or brokerage advice. We have no affiliation with any government agency and are not a lender. By using this website, you agree to our use of cookies, our Terms of Use and our Privacy Policy. We use cookies to provide you with a great experience and to help our website run effectively. You also understand that we are not affiliated with the Department of Housing and Urban Development (HUD) or the Federal Housing Administration (FHA). If you need to visit the FHA directly please visit www.hud.gov.