LIHTC tools

Maximum supportable debt for a LIHTC property

The loan a tax credit property supports is its net operating income divided by the lender's debt service coverage ratio and by the annual debt constant for the rate and amortization. Enter restricted rents, vacancy and expenses; the tool also checks loan to value and debt yield and shows which one binds.

Income and expenses

Units

Average tenant-paid rent ($/unit/month) After utility allowance; see the rent calculator.

Other income ($/unit/month)

Vacancy and loss (%)

Operating expenses ($/unit/year)

Replacement reserves ($/unit/year)

Loan terms (example inputs: use a lender's quote)

Debt service coverage (x)

Interest rate (%)

Amortization (years)

Cap rate for value (%)

Maximum loan to value (%)

Minimum debt yield (%, 0 = none)

Supportable first mortgage

$8,860,500

$88,605 per unit. Binding constraint: debt yield.

Gross potential income	$1,536,000
Less vacancy and loss at 6.0%	-$92,160
Expenses and reserves	-$735,000
Net operating income	$708,840
Loan at 1.15x DSCR	$9,008,443
Loan at 80% LTV of $12,888,000 value (5.50% cap rate)	$10,310,400
Loan at 8.0% minimum debt yield	$8,860,500
Annual debt service	$606,260
Resulting DSCR / debt yield / LTV	1.17x / 8.00% / 68.8%

Loan by rate and coverage

Rate	1.15x	1.20x	1.25x
5.00%	$8,860,500	$8,860,500	$8,860,500
5.50%	$8,860,500	$8,860,500	$8,799,733
6.00%	$8,860,500	$8,633,092	$8,287,768
6.50%	$8,502,003	$8,147,753	$7,821,843
7.00%	$8,040,183	$7,705,175	$7,396,968

Get a financing quotePermanent, forward commitment and bond loans.

As of October 30, 2026. Sources: IRC 42(g)(2) rent limits (Cornell LII); HUD FY2026 MTSP limits. An estimate, not tax or legal advice.

The formula

NOI = units x (rent + other) x 12 x (1 - vacancy) - units x (opex + reserves) Annual constant = 12 x r / (1 - (1 + r)^-n), r = rate / 12, n = years x 12 Loan (DSCR) = NOI / DSCR / annual constant Loan (LTV) = NOI / cap rate x max LTV Loan (yield) = NOI / minimum debt yield Loan = the smallest of the three

Worked example (the defaults)

100 units at $1,250 of rent and $30 of other income gross $1,536,000 a year. At 6% vacancy and $7,350 per unit of expenses and reserves, NOI is $708,840. At 1.15x and 6.00% on a 35-year schedule, the annual constant is 6.84%, so coverage supports $9,008,443. The 8% debt yield floor allows $8,860,500 and 80% of a $12,888,000 value allows $10,310,400, so the loan is $8,860,500.

Rents come from the HUD limits: use the rent calculator for your county, then subtract nothing more, since it already takes off the utility allowance. To see where this loan lands in the full deal, take NOI and terms to the capital stack builder.

Questions people ask

Why is LIHTC debt usually sized on coverage?

Rents are capped by the income limits, so the property's value is low next to its cost and lenders size the loan to what the restricted NOI can pay. Debt service coverage is almost always the binding test; loan to value and debt yield are checks.

What DSCR do LIHTC lenders use?

It varies by lender and program, and it is a term you negotiate, so this tool takes it as your input. Run the grid below the result to see how much each step of coverage costs in loan proceeds.

Should rents include a Section 8 contract?

Use the rent you expect to collect. A project-based contract can pay above the LIHTC tenant rent, and the payment does not count toward the LIHTC gross rent limit (IRC 42(g)(2)(B)(i)). Lenders often underwrite the lower of the contract and LIHTC rents if the contract may not be renewed.

What do the default numbers mean?

Nothing about any market. They are an example so the page shows a full calculation. Replace every input, especially the interest rate, with your own figures or a lender's quote.