The Math of Affordable Housing
How Non-Profit Housing Actually Gets Built and Funded
You've heard that Nova Scotia needs more affordable housing. You might even have land, a mission, or a community ready to act.
But how does affordable housing actually work financially? How do organizations build housing that charges below-market rents and still pay for construction?
This guide will show you — not with theory, but with real numbers you can adjust and explore.
By the end, you'll understand:
- Why affordable housing math works "backward"
- How rent limits are calculated from income data
- What determines how much you can borrow
- Where the "viability gap" comes from
- How grants and contributions fill that gap
- Whether a project like yours might be fundable
Time: About 15-20 minutes
How familiar are you with affordable housing financing?
The Backward Equation
Market Housing
Figure out what it costs to build
Set rents high enough to cover costs + profit
Whoever can afford it, moves in
Cost drives price.
Affordable Housing
Start with who you want to serve
Calculate what they can actually afford
Figure out what that rent level can support
Fill the gap between costs and supportable debt
Mission drives price.
The Key Insight
The gap between what affordable tenants can pay and what buildings cost to construct must be filled by something other than rent.
This is why grants exist. Not as a bonus, but as a structural requirement.
Let's see how this works with real numbers.
Who You Serve → What They Can Pay
Housing is considered "affordable" when it costs no more than 30% of a household's income.
This isn't arbitrary — it's the standard used by CMHC, Statistics Canada, and virtually every housing program in Canada.
Programs describe affordability using Area Median Income (AMI).
For Your Project
We don't have pre-loaded data for your specific area. You'll need to provide some local information.
Find this at Statistics Canada Table 98-10-0055. Or use $55,000 as a rural NS estimate.
Leave blank to use $1,100 as a rural NS estimate.
In Halifax, the median household income is $82,000 per year.
The Calculation
You selected: 60% AMI (Low Income)
Target household income:
$82,000 × 60% = $49,200 per year
Affordable rent (30% of income):
$49,200 × 30% ÷ 12 months = $1,230/month
Notice: Serving lower-income households means lower rents. At 30% AMI, maximum rent would be just $615/month. At 80% AMI, maximum rent would be $1,640/month.
This choice fundamentally determines your project's economics.
Rent → Operating Income
Based on your selections: Maximum rent: $1,230/month serving 60% AMI in Halifax
Rent doesn't go straight to your mortgage. First, you have to operate the building.
Annual Revenue (per unit)
Annual Operating Costs (per unit)
Operating expenses default to 28% of gross rent. Adjust sliders to match your expectations.
The $1,230 monthly rent became $8,522 in annual debt-service capacity. Operating costs consumed 39% before you've paid a penny toward construction.
This is why affordable housing can't simply borrow its way to completion — the income available to service debt is limited by what tenants can afford.
How Will You Finance This?
Your Net Operating Income: $10,332/year per unit
This operating income can support debt. The financing structure you choose significantly affects borrowing capacity.
Financing Structure
Which financing approach are you considering?
ACLP Loan Parameters
Debt Coverage Ratio: Lenders require your NOI to exceed debt payments by a safety margin. ACLP requires 1.10× coverage. Conventional lenders typically require 1.25×.
Amortization Period: Longer amortization means lower monthly payments, which increases borrowing capacity. ACLP allows up to 50 years. Conventional typically limits to 25-30 years.
The Viability Gap
You can borrow: $118,000 per unit
But what does it cost to build?
Your Project Configuration
Unit Distribution
How many units of each size? (Must total 12 units)
If owned, this counts as your equity contribution.
Why Unit Distribution Matters
Different unit sizes have different economics:
Larger units cost more to build (more square footage), but cost per square foot stays constant.
Larger units can charge proportionally more rent, but this calculator assumes all units serve the same income level for simplicity.
Some programs favor family-sized units (2BR, 3BR). Bachelor/1BR units serve singles and seniors.
Your unit mix should match your target population's needs. For now, this calculator uses the same AMI target for all units. Mixed-income modeling (different AMI per unit type) available in future version.
Soft Costs
Soft costs include architecture, engineering, civil/site work, permits, legal, and contingency. Adjust based on your project complexity.
Soft Costs Breakdown
Typical components (15-18% of hard costs):
- Architectural design
- Structural engineering
- Mechanical/electrical design
- Site grading and preparation
- Lateral tie-ins (water, sewer, power)
- Parking lot and landscaping
- Stormwater management
- Legal fees and land transfer
- Accounting and audit
- Building permits
- Development charges
- Project management
- Feasibility studies
- Unforeseen costs buffer
Adjust total percentage based on your project's specific needs and complexity.
Total Development Cost (Per Unit)
What is Construction Interest?
During construction (9 months), you're borrowing money but not collecting rent yet. Interest accrues on your loan draws and gets added to your permanent loan balance.
Calculation: Avg deployed ($112,500) × Construction rate (6.5%) × 0.75 years = $6,500
This is a real cost that can't be ignored. Shorter construction period = less interest carry.
The Viability Gap
This Gap Is Normal
Every affordable housing project faces this gap. It's not a failure — it's the structural difference between what affordable tenants can pay and what buildings cost.
The gap is why funding programs exist.
Filling the Gap
Your viability gap: $107,000 per unit ($1,284,000 total)
That might seem insurmountable. But multiple funding sources exist specifically to fill this gap — and they're designed to work together.
Available Funding Sources
Adjust the estimates if you have better information.
Build Canada Homes (Federal)
Typical range: $40,000 – $70,000 per unit
Grants for affordable housing construction. Higher funding for construction-ready projects with deep affordability (60% AMI or below).
→ Learn More at NSNPHANS Affordable Housing Development Program
Typical range: $25,000 – $45,000 per unit
Provincial forgivable loans. Non-profits need only 5% equity — your land contribution likely covers this requirement.
→ Learn More at NSNPHAYour Land Contribution
Your land contribution: ✓ Satisfies AHDP's 5% equity requirement ✓ Demonstrates organizational commitment ✓ Directly reduces grant funding needed
Municipal Incentives (Halifax)
Typical range: $2,000 – $10,000 per unit
Halifax offers property tax relief, fee waivers, and surplus land programs.
→ Learn More at NSNPHAThe Result
What Changes the Equation?
Now you understand the framework. But projects vary widely.
Here's what moves the needle:
Income Target (Who You Serve)
Serving lower-income households = lower rents = larger gaps. This isn't a reason to avoid deep affordability — it's why specialized programs exist.
Your current target: 60% AMI | Gap: $107,000/unit
The deeper the affordability, the larger the gap — but the funding exists if structured properly.
Construction Cost
Every dollar saved on construction is a dollar less needed in grants.
Development Partnership
A development partner with established supply chains and systematic delivery can reduce construction costs by 15-25%. This isn't just cost savings — it makes projects more fundable.
For your 12-unit project, this reduces total grant need by $480,000. Your remaining gap would drop from $12,000 to a surplus of $28,000.
Learn more about Helio partnership →Financing Structure
Your financing choice: ACLP Construction-to-Permanent
| ACLP | Conventional | Impact | |
|---|---|---|---|
| Construction rate | 6.5% | 7.5% | -1.0% |
| Permanent rate | 5.5% | 6.0% | -0.5% |
| Amortization | 50 years | 25 years | +25 years |
| Debt Coverage Ratio | 1.10 | 1.25 | -0.15 |
| Construction interest | $6,500 | $7,800 | -$1,300 |
| Max mortgage | $118,000 | $78,000 | +$40,000 |
| Viability gap | $113,500 | $153,500 | -$40,000 |
| Refinancing gap risk | ✓ None | ✗ High | — |
The difference in borrowing capacity: $40,000 per unit.
This comes from the combination of lower rates, longer amortization, and lower DCR requirement. The construction-to-permanent structure also eliminates the need for a separate refinancing application.
Land
If you own land, it's not just an asset — it's the equity that makes the project possible.
- Contributed land directly reduces the gap
- Satisfies AHDP's 5% equity requirement
- Signals commitment to funders
- Positions you as contributing partner
Many successful projects start with "we have land."
Your Project Summary
Here's what we learned about your project:
Project
Costs
Sources
Viability
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DATA SOURCES & ASSUMPTIONS
- • Area Median Income: Statistics Canada Census 2021, CPI-adjusted
- • Average Market Rent: CMHC Rental Market Report, October 2024
- • ACLP terms: CMHC program guidelines, January 2026
- • Operating costs: Nova Scotia multi-residential benchmarks
- • Grant estimates: Based on typical program allocations
⚠ This calculator provides estimates for planning purposes only. Actual funding depends on program availability, application strength, and underwriting. Seek professional advice before making project decisions.
Calculator last updated: January 2026 | Data last verified: January 15, 2026
Your Next Steps
Get Support
Connect with NSNPHA
Sector support, workshops, and guidance for non-profit housing providers.
Visit NSNPHA.ca →Explore Development Partnership
Fixed-price construction from $160K/unit with 6-month construction guarantee.
Learn About Helio →NSNPHA Resources & Support
Access guides, templates, and sector support for affordable housing development.
Visit NSNPHA Resources →