Each unit must carry a HUD-approved basic rental charge computed at 1 percent interest and a fair market rental charge computed at the note rate plus mortgage insurance premium

s236.rent_limit.basic_and_fair_market_rental_charges_established · v1.0.0

For each dwelling unit in a Section 236 project there must be established, with HUD's approval, both a basic rental charge and a fair market rental charge. The basic rental charge is the amount needed to operate the project with payments of principal and interest due under a mortgage bearing interest at the rate of 1 percent per annum, or a greater amount not exceeding the market rent for a comparable unassisted unit reduced by the value of the interest reduction payments subsidy. The fair market rental charge is the amount needed to operate the project with payments of principal, interest and the mortgage insurance premium the mortgagor is obligated to pay under the mortgage, or a greater amount not exceeding the market rent for a comparable unassisted unit. HUD may approve charges exceeding those minimum amounts only if the approved basic and fair market charges each exceed the applicable minimum by the SAME amount and the owner agrees to restrictions on project use or mortgage prepayment acceptable to HUD. Where a unit in the project also carries section 8 assistance, HUD may approve basic and fair market charges for it that differ from those for a similar unassisted unit in the same project as needed to ensure equitable treatment of tenants in the unassisted units.

Confidence

high

Effective from

1996-09-26

Consequence model

agency finding with cure

Last reviewed

2026-08-29