"What can we legally charge, and will New Hampshire Housing's own numbers let it carry the debt?"
What happens, and in what order
| Step | What happens |
|---|---|
| 1 | Pick the applicable HUD income and rent limit table for the project's HUD area |
| 2 | Compute the maximum gross rent per bedroom count and AMI tier |
| 3 | Underwrite rent down to New Hampshire Housing's own ceiling — the lesser of 98% of the maximum LIHTC rent, 98% of any HOME/HTF rent, or 90% of market rent |
| 4 | Subtract the utility allowance to get net rent |
| 5 | Build the rent roll, then subtract vacancy and operating expenses to get NOI |
| 6 | Size permanent debt against New Hampshire Housing's Debt Coverage Ratio (DCR) band |
| 7 | Carry it 20 years and confirm expenses and debt service stay funded through at least year 12 |
The steps are strictly chained, and New Hampshire Housing's own rent haircut in step 3 sits on top of the federal maximum — it does not replace it.
| Role | Part in the process |
|---|---|
| In-house development analyst or acquisitions associate | Builds the pro forma, using New Hampshire Housing's own Financing Application |
| Development director or principal | Sets the assumptions and the minimum set-aside election |
| Construction and permanent lender | Re-underwrites independently, once the deal is real |
| LIHTC equity investor or syndicator | Re-underwrites independently, once the deal is real |
| New Hampshire Housing's Multifamily Housing Division | Re-underwrites at application against its Underwriting Standards and Development Policies for Multifamily Finance, then again through carryover and cost certification |
| Task | Timing |
|---|---|
| Rent and income limit math | Day one — it drives the capital stack and precedes nearly everything else |
| First-pass restricted rent roll | About an hour, once New Hampshire Housing's own current Area Program Income Limits and Rent Limits tables and a defensible utility allowance are in hand |
| Utility allowance determination | Immediate for the statewide PHA default; weeks for New Hampshire Housing's Agency Estimate, which carries its own 30-day agency review window |
| 20-year pro forma | A day to build the shell; months of revision as the minimum set-aside election, DCR test, reserve funding and the LURA's affordability term get negotiated |
New Hampshire's structural risk looks different from a state with a published per-unit expense floor to underwrite against. No such public table was found on New Hampshire Housing's site: operating-expense reasonableness is tested against the agency's own internal database of comparable projects, so a developer has no independent number to check against before submitting.
Step one: which income and rent table — and New Hampshire Housing's own mid-year revision
| Event | Date |
|---|---|
| HUD's Multifamily Tax Subsidy Project (MTSP) limits effective | May 1, 2026 |
| New Hampshire Housing's own 2026 Area Program Income Limits, revised | June 30, 2026 |
| New Hampshire Housing's own 2026 Area Program Rent Limits, revised | June 30, 2026 |
Both of New Hampshire Housing's own 2026 tables carry a printed "Revised Date" of June 30, 2026 — a later republish of the same 2026 vintage, two months after the federal effective date. A table cached in May and one pulled in July can both be labeled "2026" and still carry different numbers.
| HUD area |
|---|
| Manchester, NH HMFA |
| Lawrence, MA-NH HMFA (New Hampshire portion) |
| Merrimack County, NH |
These three areas carry an additional "HERA Special" 60%/50% AMI row above the standard MTSP tiers; every other New Hampshire area runs the ordinary formula.
Unlike California, New Hampshire Housing does not publish its own separate income-limits methodology memo walking through vintages or a gross-rent-floor election process. Developers work directly from New Hampshire Housing's own republished HUD Multifamily Tax Subsidy Project tables by HUD area, plus the same nationwide gross-rent-floor default under Rev. Proc. 94-57 and HUD's Hold Harmless Policy that every state's developers rely on.
The federal maximum rent, New Hampshire Housing's own haircut, and the set-aside choice that feeds it
A unit is rent-restricted if gross rent does not exceed 30 percent of the imputed income limitation applicable to the unit (IRC Section 42(g)(2)(A)), using the same imputed-household-size table every state uses under IRC Section 42(g)(2)(C): 1 person for a unit with no separate bedroom, 1.5 per bedroom thereafter (2BR = 3, 3BR = 4.5, 4BR = 6).
That statutory number is a ceiling, not what New Hampshire Housing actually underwrites. Its Underwriting Standards, Section 5.03.A.1, sets rent at the lower of: 98% of the maximum allowable LIHTC rent; 98% of the maximum allowable HOME or HTF rent, for units carrying that layered subsidy; or 90% of market rent as shown by a market study, rent comparability study, or appraisal — with the final market-rent call left to New Hampshire Housing's sole discretion.
| Subsidy type | Underwritten at |
|---|---|
| Project-based rental assistance (any source) | Lesser of the payment standard set by the entity committing the subsidy, or 100% of market rent |
| USDA Rural Development loan with RD project-based subsidy | Generally underwritten like project-based rental assistance; where two subsidy programs overlap, the more restrictive rule governs |
| Section 811 Project Rental Assistance (PRA) units | Greater of HUD's Fair Market Rent or 98% of achievable market rent — the opposite direction from the other overrides, since 811 is meant to reach deeper-need tenants without starving the project of revenue |
Gross rent for New Hampshire Housing's underwriting purposes is contract rent net of the utility allowance and nothing else — no other fees are added (§ 5.03.A.6). Other income is capped at 2% of gross rental income unless a market analysis or third-party report supports more (§ 5.03.B).
That rent roll also depends on which federal minimum set-aside the sponsor elects. New Hampshire Housing follows the standard federal menu — the 20% at 50% AMI test, the 40% at 60% AMI test, or the Average Income Test (AIT) under Treasury Regulation Section 1.42-19, which lets designated imputed income limits run 20/30/40/50/60/70/80% of AMI so long as the average of the LIHTC units doesn't exceed 60%. The QAP scores a commitment to AIT with at least 40% of total units as LIHTC units at 8 points — a real incentive to widen the AMI mix, which directly reshapes the rent roll this phase is built on.
Utility allowances: the federal hierarchy, run through New Hampshire Housing's own statewide schedule
Under 26 CFR Section 1.42-10, gross rent includes a utility allowance for any utility other than telephone, cable or internet that the tenant pays directly; actual-consumption submetering counts as tenant-paid. New Hampshire Housing's own "LIHTC Utility Allowances" policy mirrors the federal hierarchy directly.
| Priority | Condition | Allowance source |
|---|---|---|
| 1 | RHS-assisted building | RHS-prescribed method, regardless of other assistance |
| 2 | Any tenant in the building receives RHS rental assistance | RHS allowance applies to every rent-restricted unit in the building |
| 3 | Building's rents and utility allowances are reviewed annually by HUD (includes Section 8 project-based and Section 811) | HUD allowance |
| 4a | A tenant receives HUD rental assistance | PHA allowance for the Section 8 Existing Housing Program |
| 4b | Everything else | PHA allowance by default, unless an owner obtains one of four optional estimates for units of similar size and construction |
As with every state, a single RHS- or HUD-assisted household can reset the allowance for the whole building.
New Hampshire Housing itself functions as the statewide public housing authority for this purpose. Its statewide "2026 Utility Allowance Schedule for New Hampshire" (published February 2026, effective April 1, 2026) applies the HUD Utility Schedule Model across four heating-degree-day zones defined by county, rather than the county-by-county patchwork of separate local PHA schedules a larger state has: Zone 1 (Cheshire, Hillsborough, Rockingham), Zone 2 (Belknap, Merrimack, Strafford, Sullivan), Zone 3 (Carroll, Grafton), and Zone 4 (Coos).
For the four optional methods that override the PHA default — utility company estimate, agency estimate, HUD Utility Schedule Model, or energy consumption model — New Hampshire Housing requires its own submission package (cover letter, usage data, the LIHTC Utility Analysis Grid, and a completeness certification) sent to assetmanagement@nhhfa.org, and commits to a written approval or denial within 30 days. An owner-run Agency Estimate must be submitted no earlier than 60 days before the 90-day implementation window begins, and must cover at least 80% of each unit type and bedroom size using at least 10 of the prior 12 months of actual utility data. The 90-day implementation rule itself is the same one every state uses under 26 CFR Section 1.42-10(c)(1): once an allowance changes, the new figure applies to gross rents due 90 days later, and annual review is mandatory.
The pro forma lives in a separate rulebook, not the QAP
New Hampshire's Qualified Allocation Plan (HFA 109) is almost entirely about scoring and threshold criteria. The actual trending, vacancy, DCR, and reserve rules that drive the operating pro forma sit in a distinct document — Underwriting Standards and Development Policies for Multifamily Finance, effective July 10, 2024 — that the QAP simply points to. Nothing here is versioned inside HFA 109 itself, so tracking the QAP's amendment history alone will miss the numbers that actually run the model.
| Item | Standard |
|---|---|
| Vacancy | Generally underwritten at 5% initially; may be adjusted up or down on a risk analysis; never underwritten below 2% absent a long-term rent-subsidy contract |
| Rent trending | Reflects historic AMI and market changes but "will typically not exceed 2.5% on an annual basis" — a discretionary ceiling, not a fixed rate |
| Operating expense trending | 3% throughout the projection period |
| Property tax trending | Trends with operating expenses (3%) by default; may instead trend with income (≤2.5%) only if the sponsor confirms intent to elect assessment under RSA 75:1-a or RSA 79-E |
| Projection horizon | 20 years, with all operating expenses and debt service required to be funded for at least a 12-year window; a projected shortfall between years 12 and 20 must be covered by the capitalized operating reserve |
| Bound | Requirement |
|---|---|
| Floor | Minimum forecasted initial-year DCR of 1.15 (as low as 1.10 where a market-rate component makes the deal more debt-dependent, provided DCR rises every subsequent year) |
| Trough | The 20-year projection may not drop DCR below 1.0 before year 13 |
| Ceiling | "Generally no higher than 1.45" during the 20-year projection — the year-12 floor takes precedence over the year-1 ceiling if the two conflict |
If syndicator or lender underwriting drives DCR above 1.45 in year one and 1.15 in year twelve, New Hampshire Housing may require evidence of a competitive LIHTC-investment solicitation before accepting the resulting subsidy request.
Projects without amortizing debt are tested differently: an operating-expense coverage ratio (total annual operating expenses divided by annual gross operating income) of 85% or less is required in year one (§ 5.04.B).
| Reserve | Amount |
|---|---|
| Operating reserve | Generally 4 to 6 months of the project's annual operating budget including debt service, capitalized at loan closing |
| Replacement reserve | $500 per unit capitalized at closing for most project types; $500 per unit deposited annually, generally increasing 3% per year |
| Insurance escrow | One full year's property and liability insurance premium |
| Real estate tax escrow | Sufficient funds to reach the next tax billing date |
New Hampshire Housing generally holds all reserve and escrow accounts itself when one of its deferred payment loans is in the capital stack.
Surplus-cash distributions follow their own order: the developer fee loan is repaid first, ahead of any New Hampshire Housing deferred payment loan (§ 2.10–2.12); New Hampshire Housing's own deferred payment loan is then typically repaid from 50% of annual surplus cash; and investor or partnership servicing fees are paid only after both the developer fee loan and any required deferred payment loan payments are current (§ 5.03.D).
Cost-containment ceilings that box in the DSCR-sized debt
New Hampshire caps total development cost and total investment before the DCR test ever runs, which mechanically limits how much subsidy-plus-equity can substitute for the debt this phase is sizing (QAP HFA 109.04.C).
| Measure | Ceiling |
|---|---|
| TDC Weighted Average — (2 × TDC/unit + TDC/bedroom) ÷ 3 | $397,000 |
| TDC High-Cost Weighted Average (adaptive reuse, brownfield, BABA-covered, Passive House, an inadequate bidder pool, or a site in Grafton, Carroll, or Coos County) | $425,000 |
| Total development cost per unit (not weighted) | $464,000 |
| Investment limit — NH Housing capital subsidy plus LIHTC equity, per unit | $315,000 (evaluated case-by-case for projects at or below 30% AMI) |
| Maximum 9% LIHTC award per project, per funding round | $942,000 general occupancy; $706,000 age-restricted |
New Hampshire Housing may allow the investment limit to be exceeded after application for reasons beyond the developer's control — it names HUD income-limit or utility-allowance fluctuations as an example — but the ceiling otherwise holds at the time of application.
Property tax's real statutory alternative, and the long affordability term with no qualified-contract escape
New Hampshire gives LIHTC owners an actual statutory election on property tax, not just a default trending assumption. RSA 75:1-a lets a taxpayer with a recorded IRC Section 42 land use restriction elect, by October 1 preceding the tax year, to be assessed under an income-based method rather than a conventional market-value appraisal.
| Element | Rule |
|---|---|
| Election deadline | Written notice to the municipality by October 1 preceding the tax year sought |
| Lock-in period | 10 tax years, provided the property remains subject to the LIHTC housing covenant |
| Tax liability once elected | 10 percent of actual rental income and other income (RSA 75:1-a, V) |
| Eligibility gap | A property still under construction as of April 1 of the tax year cannot apply for that tax year |
| Valuation exclusions | Assessed value may not reflect government subsidies, below-market financing, tax credits, or the actual acquisition/construction cost |
RSA 79-E, the state's separate Community Revitalization Tax Relief Incentive, is the other election New Hampshire Housing's own underwriting standards name as a trigger for trending property tax with income instead of expenses — it is a municipal-option program for a broader class of redevelopment projects, not LIHTC-specific, and its terms are set locally rather than in statute at a fixed rate.
Affordability runs far past the federal 15-year compliance period, and the length depends on how the deal is structured — a real number to build the 20-year projection around, not an assumption.
| Project type | Minimum affordability period |
|---|---|
| 9% LIHTC | 60 years (75 years for projects that commit to and score the longer term) |
| 4% LIHTC with tax-exempt bonds and NH Housing capital subsidy | 45 years |
| 4% LIHTC with tax-exempt bonds, no NH Housing capital subsidy | 30 years |
New Hampshire does not bar the Section 42(h)(6)(E)(i)(II) qualified-contract exit by statute the way some states do; it reaches the same practical result contractually. As a condition of receiving the LIHTC allocation, the owner must waive the right to submit a qualified contract, with that written waiver built into Section 9 of the recorded LURA itself. Separately, the QAP applies a 5-point scoring penalty to any sponsor who has pursued a qualified contract anywhere in New Hampshire in the preceding five years, unless the sponsor can show the pursuit was investor-driven rather than general-partner-driven. Any residual-value assumption premised on a year-15 conversion to market rate has to survive both of those, not just the statute CA developers check.
Where this goes wrong
- Treating the Section 42 maximum as the number to underwrite. New Hampshire Housing underwrites the lesser of 98% of the maximum LIHTC rent, 98% of any HOME/HTF rent, or 90% of market rent (Underwriting Standards § 5.03.A.1) — the statutory ceiling and the underwritten rent are two different numbers.
- Assuming a project-based-assistance unit gets the LIHTC maximum on top of the subsidy. New Hampshire Housing underwrites those units at the lesser of the payment standard or 100% of market rent, not the Section 42 ceiling.
- Using a stale '2026' income or rent table. New Hampshire Housing revised its own 2026 Area Program Income Limits and Rent Limits on June 30, 2026 — two months after the May 1 federal effective date — so a table pulled in May and one pulled in July can carry the same year label with different numbers.
- Missing a HERA Special tier. Manchester HMFA, the Lawrence MA-NH HMFA (NH portion), and Merrimack County carry a HERA Special 60%/50% AMI row above the standard MTSP figure; running every NH area through the plain formula misses it in exactly those three.
- Assuming the utility allowance is a county-by-county patchwork the way a larger state's PHA schedules are. New Hampshire Housing publishes one statewide schedule split into four heating-degree-day zones by county — using the wrong zone under- or over-states the allowance.
- Missing New Hampshire Housing's Agency Estimate submission window. An owner-calculated estimate must reach the agency at least 60 days before the 90-day implementation window begins, and New Hampshire Housing takes up to 30 days to approve or deny it — miss the runway and the new allowance isn't usable on the intended date.
- Looking for a published per-unit operating-expense floor to underwrite to. No such public table was found on New Hampshire Housing's site; expense reasonableness is tested against the agency's own internal comparable-project data, so there is no independent number to check in advance.
- Trending property tax at the income rate by default. Underwriting Standards § 5.03.F.1 trends property tax with operating expenses (3%) unless the sponsor has confirmed intent to elect assessment under RSA 75:1-a or RSA 79-E — the income-rate trend is the exception, not the default.
- Missing the RSA 75:1-a election window or its lock-in. The election must be filed with the municipality by October 1 preceding the tax year, is unavailable to a property still under construction as of April 1 of that tax year, and once made locks the property into 10-percent-of-actual-income assessment for 10 tax years regardless of how rents move.
- Optimizing only for the 1.15 DCR floor. New Hampshire Housing's band also caps the ratio at 'generally no higher than 1.45' in year one; over-performing the pro forma to satisfy a stricter investor or lender underwrite can trip that ceiling and trigger a request for evidence of competitive credit pricing.
- Assuming New Hampshire statutorily bars the year-15 qualified contract the way some states do. It reaches the same result contractually — the owner waives the right in Section 9 of the LURA as a condition of the allocation — and a sponsor who has pursued one anywhere in NH within five years also takes a 5-point scoring penalty on its next application.
- Building a 15-year pro forma and calling it done. The LURA affordability term runs 60 years for 9% LIHTC (75 with the scoring commitment) and 30–45 years for 4% bond deals; New Hampshire Housing's own underwriting wants at least a 20-year income/expense projection funded through year 12 — a model stopped at year 15 hasn't captured the actual commitment.
- Missing the TDC Weighted Average cap when sizing the equity/subsidy gap. The cost-reasonableness formula — (2 × TDC/unit + TDC/bedroom) ÷ 3 — caps at $397,000 (or $425,000 in the defined high-cost category), and the combined capital-subsidy-plus-equity investment limit is $315,000 per unit; exceeding either shrinks what New Hampshire Housing expects permanent debt to fill.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies