Underwriting is the process of determining the financial feasibility and the terms of a project. The objective of underwriting is to determine whether the ongoing revenues from a property will be sufficient to cover construction and operating costs. There is no one "right" way to do underwriting. However across all approaches, there are some common elements:

• Review of project costs for constructing the project in order to determine both reasonableness and eligibility.
  
  
• Review of the sources of financing for the project.
  
  
• Review the projected profitability and financial health of the project.
  
  
• Establish the financing and operating terms.

This HOME Front module provides guidance on underwriting multifamily housing projects that use HOME funds by teaching you to use the HOME Multifamily Underwriting Template. (As previously discussed the format of the pro-forma generated by the Template is effective in exploring a project's feasibility, but it is not the only format used by lenders and other members of a typical development team.)