"How deep do we go on affordability, and does the deal still cash flow at that depth?"
Income Levels of Tenants is the biggest lever in the whole scoring matrix, and Urban/Non-Urban changes the math
Of the 115 total points available in the 2026 9% QAP, up to 16 come from a single criterion: Income Levels of Tenants. An Applicant electing the 40-60 test under Section 42(g)(1)(B) of the Code scores 12, 14, or 16 points depending on what percentage of LIHTC Units it commits to 50% AMI or below — and that percentage threshold is not the same number everywhere in the state. It reuses the same Urban Area definition established at site screening: Bernalillo County, Rio Rancho, Las Cruces, and Santa Fe are Urban; everywhere else is Non-Urban.
| Points | Urban Area | Non-Urban Area |
|---|---|---|
| 16 | 40% | 25% |
| 14 | 30% | 15% |
| 12 | 25% | 10% |
A Project electing the 20-50 test under Section 42(g)(1)(A) is eligible only for the 16-point tier, regardless of geography.
| Points | Urban Area | Non-Urban Area |
|---|---|---|
| 16 | 54% or below | 55% or below |
| 14 | 55% or below | 56% or below |
| 12 | 56% or below | 57% or below |
Projects electing Average Income must also restrict at least 5% of Units above 60% AMI, and cannot simultaneously claim points under Projects that Incorporate Market Rate Units.
Reading the wrong column is the single most consequential mistake available here: a site just across the line from an Urban Area needs 40% of its units at 50% AMI or below to hit 16 points, while a site fifteen minutes further out under the Non-Urban standard needs only 25% — nearly a third less depth for the same score.
The rent number itself: HUD limits, several different subsidy layers, no NM-invented vintage table
As established at site screening, New Mexico does not publish its own gross rent or income limit table the way some states' allocating agencies do — gross rent limits are HUD's, linked directly from Housing New Mexico/MFA's own site. What's easy to miss is that the agency's Rent and Income Limits page does not host one PDF; it hosts a separate limit set for each program layered into the deal — LIHTC, TCAP, TCEP, RD, HOME, Section 8, Section 811, RTC, and NMHTF each get their own current and prior-year table. A deal blending LIHTC with an NMHTF or HOME loan (Phase 7) has to pull the correct limit set for each source, not assume the LIHTC table governs every restricted unit in the building.
Utility allowances are not addressed in the QAP or Underwriting Supplement beyond a bare annual owner certification that the allowance used is "accurate, allowable, [and] current" — the actual methodology follows the same federal five-branch hierarchy under Treas. Reg. §1.42-10 that applies in every state (HUD Utility Schedule Model, local PHA utility allowance schedule, an engineer's estimate, a local utility company estimate, or the HUD Utility Allowance Factor for RD-financed buildings). This research did not find a New Mexico-specific utility allowance methodology layered on top of that federal baseline.
The operating pro forma runs on Housing New Mexico's own numbers, not the market's
The 2026 Universal Multifamily Underwriting Supplement — the same document incorporated by reference into both the 9% and 4% QAPs, and into the NMHTF, HOME, and NHTF term sheets — sets specific, binding operating assumptions rather than deferring to whatever a market study or investor LOI proposes.
One structural exception breaks the standard DSCR test entirely: a Permanent Supportive Housing Project for Households or Individuals Experiencing Homelessness that carries no required-payment hard debt is instead tested on the ratio of total operating expenses to total Effective Gross Income, which must fall between 60% and 80% — the gap becomes the cash flow "cushion" that has to be deposited into a 15-year supportive services reserve. Applying the standard 1.20:1 DSCR test to a no-hard-debt PSH deal is simply the wrong test.
Replacement reserves for the first 15 years may be capitalized into the development budget, but capitalized reserves are a non-Eligible-Basis cost, and if capitalizing them produces excess projected cash flow, Housing New Mexico may respond by reducing the Project's subsidy — capitalizing a reserve is not a free way to smooth the pro forma.
Scoring depth doesn't stop at 16 points — Deep Affordability adds a second, stackable layer
Income Levels of Tenants caps out at 16 of 115 points, but a Project can go deeper than its elected tier and still score for it, under a separate criterion: Other Scoring Points Available offers up to 6 additional points, split between Deep Affordability (3 points, for income- and rent-restricting an additional 5% of Units at 30% AMI or below with secured project-based rental assistance) and a resident-selection preference for military veterans (3 points, newly added for the 2026 round and requiring HUD pre-approval for Projects with project-based Section 8 contracts).
The mechanical trap is real: restricting extra units at 30% AMI "for safety margin" without formally electing and documenting Deep Affordability on the Application and Schedule B earns nothing — the points require the same paperwork discipline (a copy of the applicable federal rental assistance contract) as any other scored criterion.
A real 2026 QAP now governs — and it's not identical to the 2025 QAP Phase 1 cites
Phase 1 of this guide, built from the 2025 QAP, noted no 2026 QAP had posted as of that research. That has changed: Housing New Mexico/MFA's Board of Directors approved both a 2026 9% QAP and a 2026 4% QAP on October 15, 2025, each effective December 1, 2025, with the 9% round's application window running January 5–20, 2026 — the same roughly-15-day pattern Phase 1 described for 2025, just shifted forward a year. The Income Levels of Tenants point tiers above are unchanged between the 2025 and 2026 QAPs, so nothing in Phase 1's rent-and-income framing needs correcting on that specific point. Other numbers did move between the two years — the cost ceiling, covered in Phase 6, tightened from 130% to 120% — which is a reminder that every 2025-QAP citation elsewhere in EZFeasi's New Mexico content should be re-checked against the 2026 text before being relied on.
Notably, the 4% QAP has no Income Levels of Tenants scoring category at all — its Selection Criteria section covers only Locational Efficiency, Rehabilitation Projects, Targeted Populations, marketing to waiting lists, Non-Smoking Properties, and a Veterans preference. A 4% Project simply elects a federal minimum set-aside test under Section 42(g) and meets it; it does not compete on the depth of that election the way a 9% Project does.
EZFeasi has no New Mexico rent calculator and no New Mexico-specific operating pro forma tooling today — this phase, for a New Mexico deal, is currently manual spreadsheet work against the published QAP and Underwriting Supplement numbers above, not anything EZFeasi automates.
Where this goes wrong
- Scoring the 40-60 election against the wrong Urban/Non-Urban column — a Rural site needs only 10%/15%/25% of Units at ≤50% AMI for 12/14/16 points, versus an Urban site's 25%/30%/40% (2026 9% QAP Section V.E).
- Treating the Average Income election's 5%-of-Units-above-60%-AMI requirement as optional — it's a mandatory condition of the election, not a scoring bonus.
- Claiming both Average Income election points and Market Rate Units points on the same Application — Section V.F expressly bars combining them.
- Underwriting to a market-study vacancy assumption below New Mexico's own 7% floor without qualifying for the narrower 5% floor (≥90% rental-assistance-covered Units, or senior housing).
- Applying one blended inflation rate to income and expenses — the Underwriting Supplement requires an asymmetric minimum: rent/other income and management fee capped at 2%, expenses floored at 3%.
- Running the standard 1.20:1 DSCR test on a no-hard-debt Permanent Supportive Housing deal instead of the 60%-80% operating-expense-to-EGI ratio test that applies specifically to that structure.
- Assuming a capitalized replacement reserve is a free way to improve the pro forma's optics — it's excluded from Eligible Basis and can trigger a subsidy reduction if it creates excess projected cash flow.
- Assuming the 2025 QAP's Income Levels of Tenants numbers or the 4% QAP's scoring categories carry over unchanged — the governing document as of the 2026 round is the 2026 9% and 4% QAPs, and the 4% QAP has no Income Levels of Tenants category at all.
- HUD
- LIHTC
- State QAPs
- IRS § 42
- Housing Finance Agencies