Most pro forma errors don’t show up as obvious mistakes — they survive internal review because the logic looks right but the mechanics are wrong. Mandatory soft debt treated as residual receipts. Construction interest on full commitment instead of average drawn balance. Debt sizing that applies DCR before subtracting mandatory payments. This cheat sheet corrects the formulas, labels every item as a Rule, Underwriting Standard, Market Range, or California-specific policy, and gives you the residual receipts waterfall, bond tests, and internal consistency checklist in one place.
Housing Finance
All things financing
3 Articles
Construction debt is where the most money flows, the most risk is concentrated, and the most consequential decisions are made in affordable housing development. Most finance guides treat the construction period as a black box. This guide opens it — explaining how construction loans are structured, priced, sized, and managed from closing through permanent loan conversion, drawn from real California transaction term sheets and written for practitioners, not theorists.
This guide walks practitioners through every term that matters in a LIHTC equity proposal — what it means, what market standard looks like, and where to push back. From the first equity installment at construction closing to the final holdback tied to Form 8609, from completion guaranty language to Year 15 ROFR structure, this is the field guide practitioners reach for when a term sheet lands on their desk.