05/21/2026
BUILDLAB
6 min readThe Acquisition Pro Forma: How to Know if an Affordable Housing Site Pencils
Before you tie up a site, you need the napkin math: total development cost, tax-credit equity, supportable debt, and the funding gap. Here is how the feasibility pro forma is built — and how to run it in minutes.
Every affordable housing deal lives or dies on a single early question: does this site pencil? The tool developers use to answer it is the feasibility pro forma — the same model the tax-credit application eventually formalizes, run in rough form at the acquisition stage so you can decide whether to pursue a site before you spend money tying it up.
Build it bottom-up, in three moves
A LIHTC pro forma is assembled in a specific order, because each piece sizes the next.
- Operating pro forma — restricted gross rents (by AMI and unit mix), less vacancy and operating expenses, gives you Net Operating Income (NOI). NOI divided by your debt-service-coverage ratio sizes the permanent loan.
- Tax-credit equity — eligible basis times the applicable fraction times the 9% or 4% credit rate gives the annual credit; ten years of credits times the equity price is your LIHTC equity.
- Sources and Uses — total development cost (acquisition + hard + soft + developer fee) minus the loan minus the equity equals the funding gap you must fill with soft money.
The gap is the answer, not the problem
A large funding gap is not a no — it is your soft-funding target. State and local sources (HCD, AHSC, HOME, city and county gap loans) plus deferred developer fee are what close it. The point of the acquisition pro forma is to size that gap early so you know how much soft money the deal will need and whether that is realistic in your market.
Run it in minutes
Our feasibility pro forma starts at the acquisition decision: enter the unit mix, AMI target, asking price, and a few assumptions, and it pulls the restricted rents for your county automatically and returns total development cost, LIHTC equity, supportable debt, and the funding gap — plus a basic 15-year cash flow.
