FORM 10-Q

               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C.  20549


 X   Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
 Act of 1934

For the quarterly period ended September 30, 1996 or

     Transition report pursuant to Section 13 or 15(d) of the Securities 
Exchange Act of 1934

For the transition period from               to              

Commission File Number:  0-17582

  AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
     (Exact name of registrant as specified in its charter)

Delaware                                                47-0719051            
(State or other jurisdiction                            (IRS Employer 
of incorporation or organization)                       Identification No.)


Suite 400, 1004 Farnam Street, Omaha, Nebraska          68102       
(Address of principal executive offices)                (Zip Code)


(402) 444-1630                              
(Registrant's telephone number, including area code)


     Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 days.

                YES   X                  NO     


































<PAGE>                               - i -

Part I.  Financial Information
  Item 1.  Financial Statements
AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
                                                                                             Sept. 30, 1996       Dec. 31, 1995
                                                                                             --------------      --------------
<S>                                                                                          <C>                 <C>
Assets
 Cash and temporary cash investments, at cost which                                                                            
  approximates market value                                                                  $   1,856,163       $   1,813,499
 Investment in mortgage-backed securities (Note 5)                                               8,631,160           9,361,640
	Investment in preferred real estate participations (PREPs),
	 net of valuation allowance (Note 6)                                                                 -                   -
	Interest receivable																																																																																60,859              64,454
 Other assets                                                                                       43,790														49,375
                                                                                             --------------      --------------
                                                                                             $  10,591,972       $  11,288,968
                                                                                             ==============      ==============
Liabilities and Partners' Capital
 Liabilities                                                                                                                   
  Accounts payable (Note 7)                                                                  $      52,647       $      58,676
  Distribution payable (Note 4)                                                                    103,226             213,157
                                                                                             --------------      --------------
                                                                                                   155,873             271,833
                                                                                             --------------      --------------
 Partners' Capital
  General Partner                                                                                      100                 100
  Beneficial Unit Certificate Holders
  ($11.52 per BUC in 1996 and $12.16 in 1995)                                                   10,435,999          11,017,035
                                                                                             --------------      --------------
                                                                                                10,436,099          11,017,135
                                                                                             --------------      --------------
                                                                                             $  10,591,972       $  11,288,968
                                                                                             ==============      ==============
</TABLE>
AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
                                                           For the             For the        For the Nine        For the Nine
                                                     Quarter Ended       Quarter Ended        Months Ended        Months Ended
                                                    Sept. 30, 1996      Sept. 30, 1995      Sept. 30, 1996      Sept. 30, 1995
                                                    ---------------     ---------------     ---------------     ---------------
<S>                                                 <C>                 <C>                 <C>                 <C>
Income
 Mortgage-backed securities income                  $      163,273      $      178,784      $      501,796      $      547,381
 Equity in earnings (losses) of
  property partnerships                                    (24,919)             21,046              17,808              59,043
 Interest income on temporary cash investments              24,262              21,784              69,793              62,601
                                                    ---------------     ---------------     ---------------     ---------------
                                                           162,616             221,614             589,397             669,025
Expenses
 General and administrative expenses (Note 7)               45,278              41,644             137,083             130,728
                                                    ---------------     ---------------     ---------------     ---------------
Net income                                          $      117,338      $      179,970      $      452,314      $      538,297
                                                    ===============     ===============     ===============     ===============
Net income allocated to:
 General Partner                                    $        3,109      $        3,257      $        9,437      $        9,883
 BUC Holders                                               114,229             176,713             442,877             528,414
                                                    ---------------     ---------------     ---------------     ---------------
                                                    $      117,338      $      179,970      $      452,314      $      538,297
                                                    ===============     ===============     ===============     ===============
Net income per BUC                                  $          .13      $          .20      $          .49      $          .59
                                                    ===============     ===============     ===============     ===============

The accompanying notes are an integral part of the financial statements.
</TABLE>




<PAGE>                               - 1 -

AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>

                                                                                           Beneficial Unit
                                                                              General          Certificate
                                                                              Partner              Holders               Total
                                                                        --------------     ----------------     ---------------
<S>                                                                     <C>                <C>                  <C>   
Partners' Capital (excluding net unrealized holding gains (losses))
 Balance at December 31, 1995                                           $         100      $    10,994,431      $   10,994,531
 Net income                                                                     9,437              442,877             452,314
 Cash distributions paid or accrued (Note 4)                                   (9,437)            (934,240)           (943,677)
                                                                        --------------     ----------------     ---------------
                                                                                  100           10,503,068          10,503,168
                                                                        --------------     ----------------     ---------------
Net unrealized holding gains (losses)
 Balance at December 31, 1995                                                    -                  22,604              22,604
 Net change                                                                      -                 (89,673)            (89,673)
                                                                        --------------     ----------------     ---------------
                                                                                 -                 (67,069)            (67,069)
                                                                        --------------     ----------------     ---------------
Balance at September 30, 1996                                           $         100      $    10,435,999      $   10,436,099
                                                                        ==============     ================     ===============
</TABLE>
AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
                                                                                              For the Nine        For the Nine
                                                                                              Months Ended        Months Ended
                                                                                            Sept. 30, 1996      Sept. 30, 1995
                                                                                            ---------------     ---------------
<S>                                                                                         <C>                 <C>   
Cash flows from operating activities                                                                                           
 Net income                                                                                 $      452,314      $      538,297
  Adjustments to reconcile net income to net cash 
   provided by operating activities
    Equity in earnings of property partnerships                                                    (17,808)            (59,043)
    Amortization of discount on mortgage-backed securities                                          (8,421)             (7,414)
    Decrease in interest receivable                                                                  3,595               2,401
    Decrease in other assets                                                                         5,585               5,401
    Decrease in accounts payable                                                                    (6,029)               (483)
                                                                                            ---------------     ---------------
 Net cash provided by operating activities                                                         429,236             479,159

Cash flows from investing activities
 Mortgage principal payments received                                                              649,228             586,895
 Distributions received from PREPs                                                                  65,804              59,043
 Investment in PREPs                                                                               (47,996)               -
                                                                                            ---------------     ---------------
 Net cash provided by investing activities                                                         667,036             645,938

Cash flow used in financing activity
 Distributions paid                                                                             (1,053,608)          (995,802)
                                                                                            ---------------     ---------------
Net increase in cash and temporary cash investments                                                 42,664             129,295
Cash and temporary cash investments at beginning of period                                       1,813,499           1,551,380 
                                                                                            ---------------     ---------------
Cash and temporary cash investments at end of period                                        $    1,856,163      $    1,680,675 
                                                                                            ===============     ===============
The accompanying notes are an integral part of the financial statements.
</TABLE>








<PAGE>                               - 2 -

AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)

1. ORGANIZATION

America First PREP Fund 2 Pension Series Limited Partnership (the Partnership) 
was formed on February 2, 1988, under the Delaware Revised Uniform Limited 
Partnership Act for the purpose of acquiring a portfolio of federally-insured 
multifamily mortgages and other investments including preferred real estate 
participations (PREPs).  PREPs consist of equity interests which are intended 
to provide the Partnership with a participation in the net cash flow and net 
sale or refinancing proceeds of the properties collateralizing the mortgage 
loans.  The Partnership began operations with the first escrow closing on May 
25, 1988, and will continue in existence until December 31, 2017, unless 
terminated earlier under the provisions of the Partnership Agreement.  The 
General Partner of the Partnership is America First Capital Associates Limited 
Partnership Six (AFCA 6).    

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 A) Financial Statement Presentation
    The financial statements of the Partnership are prepared without audit on 
			 the accrual basis of accounting in accordance with generally accepted 
			 accounting principles.  The financial statements should be read in 
    conjunction with the financial statements and notes thereto included in 
    the Partnership's Annual Report on Form 10-K for the year ended December 
    31, 1995.  In the opinion of	management, all normal and recurring 
    adjustments necessary to present fairly	the financial position at 
    September 30, 1996, and results of operations for all periods presented	
    have been made.

    The preparation of financial statements in conformity with generally 
    accepted accounting principles requires management to make estimates and 
    assumptions that affect the reported amounts of assets and liabilities and 
    disclosure of contingent assets and liabilities at the date of the 
    financial statements and the reported amounts of revenues and expenses 
    during the reporting period.  Actual results could differ from those 
    estimates.


 B) Investment in Mortgage-Backed Securities
    Investment securities are classified as held-to-maturity, 
    available-for-sale, or trading.  Investments classified as 
    held-to-maturity are carried at amortized cost.  Investments classified as 
    available-for-sale are reported at fair value with any unrealized gains or 
    losses excluded from earnings and reflected as a separate component of 
    partners' capital.  Subsequent increases and decreases in the net 
    unrealized gain/loss on the available-for-sale securities are reflected as 
    adjustments to the carrying value of the portfolio and adjustments to the 
    component of partners' capital.  The Partnership does not have investment 
    securities classified as trading.

 C) Investment in PREPs
    The investment in PREPs consists of interests in limited partnerships 
    which own properties underlying the mortgage-backed securities and are 
    accounted for	using the equity method.  When an investment in a PREP has 
    been reduced to zero, earnings are recorded to the extent that 
    distributions are received.  PREPs are not insured or guaranteed.  The 
    value of these investments is a function of the value of the real estate 
    underlying the PREPs.

 D) Allowance for Losses on Investments in PREPs
    The allowance for losses on investments in PREPs is a valuation reserve 
    which has been established at a level that management feels is adequate to 
    absorb potential losses on investments in PREPs.  The allowance is based 
    on management's best estimate of the net realizable value of such 
    properties; however, the ultimate realized values may vary from these 
    estimates.  The allowance is periodically reviewed and adjustments are 
    made to the allowance when there are significant changes in the estimated 
    net realizable value of the properties underlying the PREPs.



<PAGE>                               - 3 -

AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)

 E) Income Taxes
    No provision has been made for income taxes since Beneficial Unit 
			 Certificate (BUC) Holders are required to report their share of the 
			 Partnership's income for federal and state income tax purposes.

 F) Temporary Cash Investments
    Temporary cash investments are invested in short-term debt securities 
			 purchased with an original maturity of three months or less. 

	G) Net Income Per BUC
			 Net income per BUC has been calculated based on the number of BUCs 
			 outstanding (905,974) for all periods presented.

3. PARTNERSHIP RESERVE ACCOUNT

The Partnership maintains a reserve account which consisted of the following 
at September 30, 1996:

<TABLE>
<S>                                                                   <C>
 Cash and temporary cash investments                                  $    1,764,545
 GNMA Certificates                                                         1,504,480
 FNMA Certificates                                                         1,111,023
                                                                      ---------------
                                                                      $    4,380,048
																																																																						===============
</TABLE>

The reserve account was established to maintain working capital for the 
Partnership and is available for distribution to BUC Holders and for any 
contingencies related to Permanent Investments and the operation of the 
Partnership.  See Note 5 regarding the investment in mortgage-backed 
securities.

4. PARTNERSHIP INCOME, EXPENSES AND CASH DISTRIBUTIONS

The Partnership Agreement contains provisions for distributing the cash 
available for distribution and for the allocation of income and expenses for 
tax purposes among AFCA 6 and BUC Holders.    	

Cash distributions included in the financial statements represent the actual 
cash distributions made during each period, and the cash distributions accrued 
at the end of each period.

5. INVESTMENT IN MORTGAGE-BACKED SECURITIES

The mortgage-backed securities held by the Partnership represent Government 
National Mortgage Association (GNMA) Certificates and Federal National 
Mortgage Association (FNMA) Certificates.  The GNMA Certificates are backed by 
first mortgage loans on multifamily housing properties and pools of 
single-family properties.  The FNMA Certificates are backed by pools of 
single-family properties.  The GNMA Certificates are debt securities issued by 
a private mortgage lender and are guaranteed by GNMA as to the full and timely 
payment of principal and interest on the underlying loans.  The FNMA 
Certificates are debt securities issued by FNMA and are guaranteed as to the 
full and timely payment of principal and interest on the underlying loans.

At September 30, 1996, the total amortized cost, gross unrealized holding 
gains, gross unrealized holding losses, and aggregate fair value of 
available-for-sale securities are $2,682,572, $17,106, $84,175 and $2,615,503, 
respectively.  The total amortized cost, gross unrealized holding gains, gross 
unrealized holding losses, and aggregate fair value of held-to-maturity 
securities are $6,015,657, $149,195, $288,339 and $5,876,513, respectively. 







<PAGE>                               - 4 -

AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)

Descriptions of the Partnership's mortgage-backed securities at September 30, 
1996, are as follows:

<TABLE>
<CAPTION>
                                          					               			    Number	 	 Interest				 					Maturity     						Carrying 
  Type of Security and Name        					  Location              			of Units    	   Rate  		  								Date       						Amount 
  ----------------------------------				  --------------------     --------    --------  		 -------------    ---------------
  <S>                              					  <C>                     	<C>         <C>   						 <C>			    		     <C> 
  Held-to-Maturity
    GNMA Certificates:                                                                                       
     Ashwood Apartments            					  Tulsa, OK              					144      			9.25%    						07/15/23    $  	  	557,588
     Broadmoor Court	              					  Colorado Springs, CO        	46		    			9.25%    						10/15/29			     			581,988
			  Owings Chase Apartments												  Pikesville, MD														234				 				6.75%    						12/15/23									3,203,768
			  Pools of single-family properties 			  																										   				 				8.74%(1) 		2016 to 2018									1,672,313
                                                                                                              --------------
                                                                                                                  6,015,657
                                                                                                              --------------

  Available-for-Sale
    GNMA Certificates:
			  Pools of single-family properties												  																		   								 6.03%(1)				 						2008											761,875(2)
			  Pools of single-family properties														  																   								 7.58%(1)					 					2008											742,605(2)

		  FNMA Certificates:
			  Pools of single-family properties																  														   				 				5.52%(1)						 				2000									1,111,023(2)
																																																								  																				 																		 											---------------
																																																										  																			 																		 											 			2,615,503
                                                                                              					 								 ---------------
  Balance at September 30, 1996                                                                              $    8,631,160 
                                                                                              							 							===============
</TABLE>
(1) Represents yield to the Partnership.
(2)	Reserve account asset - see Note 3.

Reconciliation of the carrying amount of the mortgage-backed securities is as 
follows:
<TABLE>
<S>																																																																																																						<C>
Balance at December 31, 1995																																																																											  $	 	 9,361,640
		Addition
			Amortization of discount on mortgage-backed securities																																																									8,421
		Deductions
			Mortgage principal payments received																																																																								(649,228)
   Change in net unrealized holding losses on available-for-sale securities                                     (89,673)
																																																																																																									---------------
Balance at September 30, 1996      																																																																 		 		$			 8,631,160
																																																																																																									===============
</TABLE>

6.	INVESTMENT IN PREPs

The Partnership's PREPs consist of interests in limited partnerships which own 
multifamily properties financed by the Partnership.  The limited partnership 
agreements originally provided for the payment of a base return on the equity 
provided to the limited partnerships and for the payment of additional amounts 
out of a portion of the net cash flow or net sale or refinancing proceeds of 
the properties subject to various priority payments.  Certain of the 
agreements have been amended to defer payment of the base return.











<PAGE>                               - 5 -

AMERICA FIRST PREP FUND 2 PENSION SERIES LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)

Descriptions of the PREPs at September 30, 1996, are as follows:

<TABLE>
<CAPTION>
                                                                                                               Carrying
  Name                             Location                 Partnership Name                                     Amount 
  --------------------------       --------------------     -----------------------------              -----------------
  <S>                              <C>                      <C>                                        <C> 
  Broadmoor Court                  Colorado Springs, CO     Stazier Associates Colorado Springs, Ltd.  $         53,547
  Owings Chase Apartments          Pikesville, MD           Owings Chase Limited Partnership                    150,000
  Ashwood Apartments               Tulsa, OK                129th Street Limited Partnership                       -
  Laurel Park Apartments           Riverdale, GA            Gold Key Venture                                       -
                                                                                                       -----------------
                                                                                                                203,547
  Less valuation allowance                                                                                     (203,547)
                                                                                                       -----------------
  Balance at September 30, 1996                                                                        $           -
                                                                                                       =================
</TABLE>
Reconciliation of the carrying amount of the PREPs is as follows:

<TABLE>
<S>                                                                                                    <C>
Balance at December 31, 1995                                                                           $           -
  Additions
   Investment in PREPs                                                                                           47,996
   Equity in earnings of property partnerships                                                                   17,808
  Deduction
   Distributions received from PREPs                                                                            (65,804)
                                                                                                       -----------------
Balance at September 30, 1996                                                                          $           -
                                                                                                       =================
</TABLE>

7. TRANSACTIONS WITH RELATED PARTIES

Substantially all the Partnership's general and administrative expenses are 
paid by AFCA 6 or an affiliate and reimbursed by the Partnership.  The amount 
of such expenses reimbursed to AFCA 6 during 1996 was $115,108 ($28,316 for 
the quarter ended September 30, 1996).  The reimbursed expenses are presented 
on a cash basis and do not reflect accruals made at quarter end.

AFCA 6 is entitled to an administrative fee of .35% per annum of the 
outstanding principal amounts invested in mortgage-backed securities, PREPs, 
and temporary cash investments to be paid by the Partnership to the extent 
such amount is not paid by property owners.  During 1996, AFCA 6 earned 
administrative fees of $20,826 ($6,852 for the quarter ended September 30, 
1996).  Of this amount, $19,086 ($6,272 for the quarter ended September 30, 
1996) was paid by the Partnership and the remainder was paid by property 
owners.

The general partner of the property partnership which owns Owings Chase 
Apartments is principally owned by an employee of an affiliate of AFCA 6.  
Such employee has a nominal interest in the affiliate.  Affiliates of AFCA 6 
also own small interests in the general partner.  The general partner has a 
nominal interest in the property partnership's profits, losses and cash flow 
which is subordinate to the interest of the Partnership.  The general partner 
did not receive cash distributions from the property partnership in 1996.

An affiliate of AFCA 6 has been retained to provide property management 
services for Laurel Park Apartments and Owings Chase Apartments.  The fees for 
services provided represent the lower of (i) costs incurred in providing 
management of the property, or (ii) customary fees for such services 
determined on a competitive basis and amounted to $29,377 in 1996 ($10,246 for 
the quarter ended September 30, 1996).





<PAGE>                               - 6 -

     Item 2.  Management's Discussion and Analysis of Financial Condition and 
Results of Operations

Liquidity and Capital Resources

The Partnership originally acquired: (i) five mortgage-backed securities 
guaranteed as to principal and interest by the Government National Mortgage 
Association (GNMA) collateralized by first mortgage loans on multifamily 
housing properties located in four states, GNMA Certificates backed by pools 
of single-family mortgages (the GNMA Certificates); and (ii) limited 
partnership interests (PREPs) in five limited partnerships which own the 
multifamily housing properties financed by the GNMA Certificates.  The 
Partnership has been repaid by GNMA on the mortgage-backed securities 
collateralized by the Villages at Moonraker and Laurel Park Apartments.  
During the second quarter of 1995, the Partnership withdrew as a limited 
partner of the operating partnership which owns the Villages at Moonraker.  
Therefore, the Partnership no longer has an equity interest in this property.  
The Partnership continues to hold its equity interest in Laurel Park 
Apartments.  Collectively, the remaining GNMA Certificates and the PREPs are 
referred to as the Permanent Investments.

The following table shows the occupancy levels of the properties financed by 
the Partnership at September 30, 1996.

<TABLE>
<CAPTION>
                                                                                                     Number          Percentage
                                                                                 Number            of Units            of Units
 Property Name                               Location                          of Units            Occupied            Occupied
-------------------------------------        ------------------               ---------          ----------         -----------
<S>                                          <C>                              <C>                <C>                <C>
 Ashwood Apartments                          Tulsa, OK                             144                 140                  97%
 Broadmoor Court                             Colorado Springs, CO                   46                  44                  96%
 Laurel Park Apartments                      Riverdale, GA                         387                 379                  98%
 Owings Chase Apartments                     Pikesville, MD                        234                 230                  98%
                                                                              ---------          ----------         -----------
                                                                                   811                 793                  98%
                                                                              =========          ==========         ===========
</TABLE>

Distributions

Cash distributions paid or accrued per Beneficial Unit Certificate (BUC) were 
as follows:

<TABLE>
<CAPTION>
                                                                                               For the Nine        For the Nine
                                                                                               Months Ended        Months Ended
                                                                                             Sept. 30, 1996      Sept. 30, 1995
                                                                                             --------------      --------------
<S>                                                                                          <C>                 <C>
Regular monthly distributions
 Income                                                                                      $       .4888       $       .5833
 Return of Capital                                                                                   .5424               .4967
                                                                                             --------------      --------------
                                                                                             $      1.0312       $      1.0800
                                                                                             ==============      ==============
Distributions
	Paid out of cash flow (including mortgage principal payments)                               $      1.0312       $      1.0800
                                                                                             ==============      ==============
</TABLE>

Regular monthly distributions to investors consist primarily of interest and 
principal received on GNMA and Federal National Mortgage Association (FNMA) 
Certificates.  Additional cash for distributions is received from PREPs and 
temporary cash investments.  The Partnership may draw on reserves to pay 
operating expenses or to supplement cash distributions to BUC Holders.  The 
Partnership is permitted to replenish its reserves through the sale or 
refinancing of assets.  During the nine months ended September 30, 1996, a net 
amount of $205,861 ($154,920 for the quarter ended September 30, 1996) of 
undistributed mortgage principal payments was placed in reserves.  The total 
amount held in reserves at September 30, 1996, was $4,380,048 of which 
$2,615,503 was invested in GNMA and FNMA Certificates.  

<PAGE>                               - 7 -

The Partnership believes that cash provided by operating and investing 
activities and, if necessary, withdrawals from the Partnership's reserves will 
be adequate to meet its short-term and long-term liquidity requirements, 
including the payments of distributions to BUC Holders.  Under the terms of 
the Partnership Agreement, the Partnership has the authority to enter into 
short-term and long-term debt financing arrangements; however, the Partnership 
currently does not anticipate entering into such arrangements.  The 
Partnership is not authorized to issue additional BUCs to meet short-term and 
long-term liquidity requirements.

Asset Quality

The Partnership continues to receive the full amount of monthly principal and 
interest payments on its GNMA and FNMA Certificates.  The GNMA and FNMA 
Certificates are fully guaranteed as to principal and interest by GNMA and 
FNMA respectively.  The obligations of GNMA are backed by the full faith and 
credit of the United States government.  

PREPs, however, are not insured or guaranteed.  The value of these investments 
is a function of the value of the real estate underlying the PREPs.  It is the 
policy of the Partnership to make a periodic review of the real estate 
underlying the PREPs in order to establish, when necessary, a valuation 
reserve on the investment in PREPs.  The allowance for losses on investment in 
PREPs is based on the fair value of the properties underlying the PREPs.  The 
fair value of the properties underlying the PREPs is based on management's 
best estimate of the net realizable value of such properties; however, the 
ultimate realized values may vary from these estimates.  The allowance is 
periodically reviewed and adjustments are made to the allowance when there are 
significant changes in the estimated net realizable value of the properties 
underlying the PREPs.  Internal property valuations and reviews performed 
during the nine months ended September 30, 1996, indicated that the PREPs 
recorded on the balance sheet at September 30, 1996, required no adjustments 
to their current carrying amounts.

As previously reported, Laurel Park Apartments has not been current on its 
mortgage obligations since December 31, 1994.  Until such time that the 
mortgage is current, the Partnership does not anticipate receiving an equity 
distribution from Laurel Park Apartments.  During August 1996, the General 
Partner of the Partnership and general partner of the operating partnership 
which owns Laurel Park Apartments negotiated a Loan Modification Agreement 
(LMA) with HUD.  Among other things, the LMA reduced the interest rate on the 
mortgage from 9.25% to 7.75% as well as satisfied all delinquent principal and 
interest.  Laurel Park Apartment is now current on its mortgage obligations.  
The Partnership made an additional equity investment of $47,996 to effect the 
LMA.  The General Partner feels the LMA will better position Laurel Park 
Apartments to remain current on its mortgage obligations as well as provide 
for future equity distributions. 

The overall status of the Partnership's other Permanent Investments has 
generally remained constant since June 30, 1996.

RESULTS OF OPERATIONS

The tables below compare the results of operations for each period shown.
<TABLE>
<CAPTION>
                                                                               For the             For the            Increase
                                                                         Quarter Ended       Quarter Ended           (Decrease)
                                                                        Sept. 30, 1996      Sept. 30, 1995           From 1995
                                                                        ---------------     ---------------     ---------------
<S>                                                                     <C>                 <C>                 <C>
Mortgage-backed securities income                                       $      163,273      $      178,784      $      (15,511)
Equity in earnings (losses) of property partnerships                           (24,919)             21,046             (45,965)
Interest income on temporary cash investments                                   24,262              21,784               2,478
                                                                        ---------------     ---------------     ---------------
                                                                               162,616             221,614             (58,998)
General and administrative expenses                                            (45,278)            (41,644)              3,634
                                                                        ---------------     ---------------     ---------------
Net income                                                              $      117,338      $      179,970      $      (62,632)
                                                                        ===============     ===============     ===============
</TABLE>




<PAGE>                               - 8 -

<TABLE>
<CAPTION>
                                                                          For the Nine        For the Nine            Increase
                                                                          Months Ended        Months Ended           (Decrease)
                                                                        Sept. 30, 1996      Sept. 30, 1995           From 1995
                                                                        ---------------     ---------------     ---------------
<S>                                                                     <C>                 <C>                 <C>
Mortgage-backed securities income                                       $      501,796      $      547,381      $      (45,585)
Equity in earnings of property partnerships                                     17,808              59,043             (41,235)
Interest income on temporary cash investments                                   69,793              62,601               7,192
                                                                        ---------------     ---------------     ---------------
                                                                               589,397             669,025             (79,628)
General and administrative expenses                                           (137,083)           (130,728)              6,355
                                                                        ---------------     ---------------     ---------------
Net income                                                              $      452,314      $      538,297      $      (85,983)
                                                                        ===============     ===============     ===============
</TABLE>

Mortgage-backed securities income decreased for the quarter and nine months 
ended September 30, 1996, compared to the same periods in 1995.  This decrease 
was primarily due to the continued amortization of the principal balances of 
the mortgage-backed securities.

Equity in earnings of property partnerships is a function of the cash flow 
received by the Partnership from its interest in the operating partnerships 
which own the properties.  Prior to the write-down of each investment in PREP 
to zero, equity in earnings of property partnerships also reflects the 
Partnership's allocable share of earnings generated by each of the properties. 
Equity in earnings of property partnerships decreased for the quarter and nine 
months ended September 30, 1996, compared to the same periods in 1995.  This 
decrease was primarily a result of recording a loss of approximately $48,000 
for Laurel Park Apartments during the quarter ended September 30, 1996.  This 
loss resulted from expenses incurred in conjunction with entering into a loan 
modification agreement with HUD in August.

Excluding the loss due to Laurel Park Apartments, equity in earnings of 
property partnerships increased $2,031 for the quarter ended September 30, 
1996, compared to the same period in 1995.  This increase was primarily 
attributable to an increase of approximately $2,000 in cash flow received from 
Broadmoor Court during the quarter ended September 30, 1996.  Excluding the 
loss due to Laurel Park Apartments, equity in earnings of property 
partnerships increased $6,761 for the nine months ended September 30, 1996, 
compared to the same period in 1995.  This was due to an increase of 
approximately $6,000, and $1,000 in cash flow received from Broadmoor Court 
and Ashwood Apartments, respectively, for the nine months ended September 30, 
1996, compared to the same period in 1995.

The increase in interest on temporary cash investments for the quarter and 
nine months ended September 30, 1996, compared to the same periods in 1995 was 
primarily attributable to the increase in cash reserves as undistributed 
principal was placed in reserves throughout 1995 and the first nine months of 
1996.

General and administrative expenses increased for the quarter and nine months 
ended September 30, 1996, due primarily to an increase in travel expenses and 
professional fees.



















<PAGE>                               - 9 -

PART II.  OTHER INFORMATION

     Item 6.   Exhibits and Reports on Form 8-K

          (a)  Exhibits

               4(a) Agreement of Limited Partnership dated May 25, 1988
                    (incorporated herein by reference to Form 10-Q dated 
                    June 30, 1988 filed pursuant to Section 13 or 15(d) of 
                    the Securities Act of 1934 by America First PREP Fund 2 
                    Pension Series Limited Partnership (Commission File No.
                    33-13407)).

               4(b) Form of Certificate of Beneficial Unit Certificate 
                    (incorporated herein by reference to Form 10-Q dated 
                    June 30, 1988 filed pursuant to Section 13 or 15(d) of 
                    the Securities Act of 1934 by America First PREP Fund 2 
                    Pension Series Limited Partnership (Commission File No. 
                    33-13407)).

          (b)  Form 8-K

               The registrant did not file a report on Form 8-K during the 
               quarter for which this report is filed.



















































<PAGE>                               - 10 -

	                                  SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned, thereunto duly authorized.

Dated:  November 12, 1996     AMERICA FIRST PREP FUND 2
                              PENSION SERIES LIMITED PARTNERSHIP

                              By America First Capital
                                   Associates Limited
                                   Partnership Six, General
                                   Partner

                              By America First Companies L.L.C.,
                                   General Partner


                              By /s/ Michael Thesing             
                                   Michael Thesing
                                   Vice President, Secretary,
                                   Treasurer and Chief Financial
                                   Officer




















































<PAGE>                               - 11 -