3.1.26 Operating Deficit
HUD Multifamily Accelerated Processing (MAP) Guide, HUD Handbook 4430.G (2020 ed., rev. Mar. 19, 2021) · 2026 edition · updated 2026-10-05 · United States
A. An operating deficit escrow (also known as the Initial Operating Deficit Escrow (IOD) for construction loans) is required on all applications for new construction and many applications for substantial rehabilitation to provide funding for operating expenses and debt service when net income is not available during the initial lease up and stabilization period. A debt service escrow may also be required for Section 223(f) proposals where analysis requires it. This escrow is not mortgageable and unused portions will be returned to the Borrower. See Chapter 7, Section 7.14 and Chapter 8, Section 8.14 for more detail.
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Chapter 3 Programs 3.1 General Program Requirements
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