This online tutorial introduces nonprofit developers to the basics of using the Low Income Housing Tax Credit (LIHTC) for the development of affordable rental housing. The first section introduces Enterprise Community Partners and Enterprise Community Investment. An overview describes the LIHTC program, including income restrictions that apply to the housing units and tenants. Users learn how housing tax credits and equity syndications work, including the structuring of tax credit syndications, the tax credit investment process and the parties involved. A section on calculating the tax credit covers the types of tax credit rates (9% and 4%) available; the history of the LIHTC percentages; and how to calculate the amount of tax credit equity, including project costs that comprise the eligible basis on which the tax credit is calculated.

A sample project exercise walks the user through the six basic steps of underwriting a project and structuring its financing: calculating project eligible basis, estimating the tax credits generated, estimating the tax credit equity, estimating the first mortgage amount, estimating the funding gap and filling the gap with other financing. A section on tax credit administration addresses the tax credit timeline, applying for tax credits, carrying over the tax credits allocated and placing a project in service. A section on financial structuring with tax credits provides an overview of financial structuring as well as guidance in filling the financial gap; three scenarios for using HOME with the 9 percent tax credit rate; and advice in combining the LIHTC and Historic Tax Credits in the same project.

The final section addresses the syndicator's approach to project underwriting, which focuses on the quality of the development team; project characteristics; the development budget; rents, market and marketability; operating costs; operating, replacement and other reserves; and sponsor guarantees.