24 CFR § 904.108 - Break-even amount.

§ 904.108 Break-even amount.

(a) Definition. The term “break-even amount” as used herein means the minimum average monthly amount required to provide funds for the items listed in the illustration below. A separate break-even amount shall be established for each size and type of dwelling unit, as well as for the Project as a whole. The break-even amount for EHPA and NRMR will vary by size and type of dwelling unit; similar variations as to other line items may be made if the LHA deems this equitable.

The following is an illustration of the computation of the break-even amount based upon hypothetical amounts.
(1) Operating Expense (see § 904.109):
Administration $8.50
Homebuyer services 2.00
Project supplied utilities 3.00
Routine maintenance - common property 3.00
Protective services 2.00
General expense 6.50
Nonroutine maintenance - common property (Contribution to operating reserve) 2.00 $27.00
(2) Earned Home Payments Account (see § 904.110) 12.00
(3) Nonroutine Maintenance Reserve (see § 904.111) 7.50
Break-Even Amount 46.50
The break-even amount does not include the monthly allowance for utilities which the homebuyer pays for directly, nor does it include any amount for debt service on the Project notes.

(b) Excess over break-even. When the homebuyer's required monthly payment (see § 904.107(j)) exceeds the applicable break-even amount, the excess shall constitute additional Project income and shall be deposited and used in the same manner as other Project income.

(c) Deficit in monthly payment. When the homebuyer's required monthly payment is less than the applicable break-even amount, the deficit shall be applied as a reduction of that portion of the monthly payment designated for operating expense (i. e., as a reduction of Project income). In all such cases, the EHPA and the NRMR shall be credited with the amount included in the break-even amount for these accounts.

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