THE GREEN HOME ADVANTAGE, LLC

Since  April 2016, HUD has offered significant MIP rate reductions for Federal  Housing Administration (FHA) insured multifamily loans secured by  buildings that attain “green” certification, among other requirements.   Annual MIP rates are typically reduced to 25 basis points from the  previous rates (generally between 45 and 70 basis points).  The rate  reductions apply to multifamily new construction, renovation, refinance,  purchase, or seniors’ housing.

Please  note. The HUP Green MIP program has been suspended. The 0.25 basis  point reduction previously required the implementation of a “green”  program. It is now available to all properties. There is a possibility  that the previous requirement will be reinstated in the future.” 

Implemented in 1986 by Section 42 of the Internal Revenue Code, the Internal  Revenue Service allocates funds to each State on a per capita basis.   Each State’s housing agency (e.g., the Louisiana Housing Corporation)  allocates these funds as tax credits to developers.  Investors buy these tax credits in qualified housing projects, creating cash equity for the developers, thereby reducing their project debt burden.  Two levels of tax credits are available: the first at 9% of depreciable basis,  competitively allocated, and the second at 4% of depreciable basis,  which comes with state bond financing.