This is a list of helpful pro forma definitions:

Adjusted basis = The original Cost of a property plus the value of any capital expenditures for improvements to the property, minus any depreciation taken. (I don't know why this line is here.)

Ad valorem taxes = Property taxes based on assessed value of property.

Amortization = Loan repayment by equal periodic payments calculated to retire the principal at the end of a fixed period and to pay accrued interest on the outstanding balance.

Appreciation = Increase in the value of property.

Assessed valuation = Value assigned to a piece of property by the local governmental unit for real estate tax purposes. This is usually less than the market value of the property. The relationship between assessed and market value varies widely depending on location and jurisdiction.

Balance test = This test compares total sources needed during the construction period with the sources available during the construction period. There is a shortage of financing during the construction period if the number shown is a positive amount. This shortage can be corrected by increasing the sources available during construction by this amount. A negative number indicated that more funds are available during the construction period than necessary. The sources needed and sources available during the construction period are in balance when the test result is $0.

Capital asset = An asset of a permanent or fixed nature or employed in carrying on a business or trade.

Cash flow = Money left from a project's gross income after all expenses (operating and debt service) have been deducted. Some developers include depreciation and deferred-tax calculation in computing cash flow.

Cash flow after debt service = The amount of funds remaining after operating costs and debt service have been deducted from gross income, but before any required DCR has been applied.

Cash flow before debt service = The amount of funds remaining after operating expenses have been deducted from gross income, but before debt service has been applied. (Same as NOI)

Community Development Block Grants (CDBG) = Under Title I of the Housing and Community Development Act of 1974, eight former categorical grant and loan programs were replaced by a system of unified block grants under which communities over 50,000 people are entitled to receive funding while other communities may apply for discretionary funding. Its purpose is to encourage more broadly conceived community development projects and expand housing opportunities for low- and moderate-income persons.

Conforming loan = A conventional mortgage loan that meets the criteria for purchase by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation.

Construction loan = A short-term loan that enables a developer to pay contractors' bills and other expenses incurred before and during the construction period.

Contingency = An amount in a budget set aside for unanticipated costs. Costs may be for planning, financing or development. New construction projects typically budget 5-10%, while rehabilitation can be as high as 15%. Many states restrict the amount of contingency in calculating eligible basis or cost. Individual lenders may also restrict how much they will agree to lend or release for contingency items.

Contingent interest = A short term loan which enables a developer to pay contractors' bills and other expenses incurred before and during the construction period (also known as an interim loan).

Conventional loan = A mortgage loan not insured by FHA or guaranteed by the VA or Farmers Home Administration.

Cost-plus contract = A construction contract which has an allowance for builder's profit (as distinct from a set price contract).

Cost-plus fee agreement = An agreement under which the contract (in an owner-contractor agreement) or the architect (in an owner-architect agreement) is reimbursed for direct and indirect costs and in addition, is paid a fee for services. The fee is usually stated as a stipulated sum or as a percentage of costs.

Debt capital = Money loaned at an agreed interest rate for a fixed term of years: distinguished from equity capital.

Debt coverage ratio = The ratio of net operating income to total debt.

Debt service = A borrower's periodic payment comprising repayment of principal plus payment of interest on the unpaid balance.

Debt service constant = A factor that, multiplied by the total loan amount, or total principal, yields the annual debt-service payment (principal plus interest) required to amortize a loan.

Development loan = A short-term loan, advanced before a construction loan and used by developers to acquire land and install basic utilities such as roads, sewers, etc.

Development process = The process through which development projects are conceived, initiated, analyzed, financed, designed, built, and managed.

Difficult development area = Metropolitan areas and rural counties with high construction, land and utility costs relative to area media income. These areas cannot contain more than 20% of the national metropolitan area population and the rural area population respectively.

Eligible basis = The sum of the eligible cost elements that are subject to depreciation, such as expenditures for new construction, rehabilitation and building acquisition. The eligible basis for the rehabilitation or new construction expenditures is increased by 30% if the project is located in a designated low-income or high-cost area.

Equity capital = Money invested by owners or others who share in profits; distinguished from debt capital.

Fair market rent = An amount determined by HUD to be the cost of modest, non-luxury rental units in a specific market area. With certain exceptions, it is the highest rent chargeable for that market under Section 8.

Fair market value = The price at which property is transferred between a willing buyer and a willing seller - both with good information and under no compulsion to buy or sell.

Feasibility study = A detailed investigation and analysis conducted to determine the financial, economic, technical, or other advisability or a proposed project.

Federal Home Loan Mortgage Corporation = A quasi-governmental agency that purchases mortgages in the secondary mortgage market from insured depository institutions and HUD-approved mortgage bankers.

Federal Housing Administration (FHA) = A federal agency designed to encourage private housing financing through the insurance of mortgages.

Federal National Mortgage Association (FNMA) = Also known as Fannie Mae. Federally chartered private corporation providing a secondary market for residential mortgages.

Fiscal year = Annual accounting period of the Federal Government, beginning October 1 and ending September 30 of the subsequent calendar year. The fiscal year is designated by the calendar year in which it ends, so that fiscal year 1991 refers to the fiscal year beginning October 1, 1990 and ending September 30, 1991.

Flexible payment mortgage = A mortgage in which payments are tailored to meet changes in a borrower's financial position.

Gap financing = A loan required by a developer to bridge the gap, i.e. to make up a deficiency between the amount of mortgage loan due on project completion and the expenses incurred during construction.

General partner = The co-owner(s) of a venture who is liable for all debts and other obligations of that venture as well as for the management and operation of the partnership. The general partner can have control of the business and can take actions which are binding on the other partners.

Government National Mortgage Association (GNMA) = Also known as Ginnie Mae. A government corporation which provides a secondary market for housing mortgages and special assistance to housing mortgages financed under special HUD mortgage insurance programs.

Ground lease or rent = A lease of land alone, as distinguished from a leade of land with improvements on it, usually on a long-term basis.

Guaranteed loan = Loan in which a private lender is assured repayment by the Federal Government of part or all of the principal or interest, or both, in the event of a default by the borrower. Unlike an insured loan, no insurance fund exists and no insurance premiums are paid.

Initial closing = The date upon which the construction lender funds the construction loan.

Interim financing = Loan covering land and construction costs current real estate taxes, and other incidental expenses attributable to the construction period. Also called a construction loan.

Letter of credit = A document which approves the credit of an individual or corporation and enables it to borrow or get bank funds.

Leverage or leveraging = The technique, usually through borrowing, of maximizing an investment's profit-equity ratio.

Loan-to-value ratio = The relationship of a mortgage to the appraised value of a security. This ratio is expressed to a potential purchaser of property in terms of the percentage a lending institution is willing to finance.

Low-income family = Generally, a family whose income does not exceed 80% of the median family income of the area involved.

Market rent = Rental that would be charged by an owner of a HUD/FHA-insured multifamily unit if the owner were paying interest on the loan at the HUD/FHA-approved market interest rate.

Market study = A projection of future demand for a specific type of project, usually with a recommendation for volume of space to be sold or rented and sale or rental price.

Market value = The price at which a property could be sold on the open market, with buyer and seller free from abnormal pressures.

Mortgage = A formal document executed by an owner of property, pledging that property as a security for payment of a debt of performance of some other obligation; the security instrument.

Mortgage revenue bond = Bonds issued by a public entity payable from revenues derived from repayments of interest on mortgage loans which were financed from the proceeds of the bonds.

Multifamily development = Development of more than two dwellings as a part of a single development. Generally associated with garden apartments, townhouses and high-rise apartment complexes.

Negative amortization = A loan payment schedule in which the outstanding principal balance goes up, rather than down, because payments do not cover the full amount of interest due. The unpaid interest is added to the principal. This is a feature of many graduated payment mortgages.

Negative cash flow = A situation in which expenditures required to maintain an investment exceed income received on the property.

Net Operating Income (NOI) = The remainder after total operating expenses are deducted from gross income (synonymous with net net net). NOI is calculated before deducting debt service.

Operating subsidies = HUD payments to public housing agencies to assist the payment of operating expenses of public housing, or to the owners of certain multifamily projects for low-income families.

Permanent financing = Mortgage loan covering development cost, interim loans, construction loans, financing expenses, marketing, administrative, legal, and other costs. This loan differs from the construction loan in that this financing goes into place after the project is constructed and open for occupancy. It is a long-term obligation.

Project cost = Total cost of the project including professional compensation, land costs, furnishings and equipment, financing, and other charges, as well as the construction costs.

Rehabilitation = For the purpose of the national housing goals set by the Housing and Urban Development Act of 1968, a rehabilitation housing unit with more than 20% of the total mortgage proceeds or development costs expended for improvements, as opposed to property acquisition. Rehabilitation takes many forms, varying from a plan to repaint and modernize a building and bring it up to building code standards, to a complete gutting of the interior and replacement of the mechanical systems and roof.

Rental assistance payments = Generally refers to the FmHA program of rental assistance for low-income families in rural areas under Section 521 (a)(2)(A) of the Housing Act of 1949.

Rental control = Limitation of annual rent increases by municipal ordinance, state or federal government.

Rent-up period = The amount of time it takes for a building to reach a stable occupancy rate and income stream.

Replacement cost = The cost to replace a structure with one of equivalent value and function. HUD calculates replacement by determining current cost of improvements to the land and the cost of structures, including builder and architect fees. Also includes financing costs, carrying charges, and legal and organizational expenses. Usually provides a higher value for ascertaining the maximum mortgage than the more conventional and conservative "estimated value."

Secondary financing = A loan secured by a second mortgage on a property, sometimes used to refer to any financing technique other than equity and first-mortgage debt.

Syndication = The sale of equity interests (shares) in real estate projects to investors other than the original developers.

Total annual potential gross rent = The amount of rent received during one year, for all unit types.

Total monthly rent = The number of units multiplied by the monthly rent per unit.

Total development costs = The sum of all costs for planning, administration, site acquisition, relocation, demolition, construction and equipment, interest and carrying charges, on-site streets and utilities, non-dwelling facilities, a contingency allowance, insurance premiums, off-site facilities, any initial operating deficit and all other costs necessary to develop a project.