MODIFICATION AGREEMENT

     This  modification  agreement (the "Agreement") is made into as of the ___
     day  of  May,  1997  by  and  among  KRUPP   GOVERNMENT   INCOME  TRUST,  a
     Massachusetts business trust ("GIT"), LOVE FUNDING CORPORATION,  a Virginia
     Corporation  ("The First  Mortgage"),  McNAB-K C 3 LIMITED  PARTNERSHIP,  a
     Massachusetts limited partnership ("The Partnership") and KRUPP GP, INC., a
     Massachusetts corporation,  GEORGE KRUPP, an individual (collectively,  the
     "Partners")

                                       WITNESSETH

     WHEREAS,  First  Mortgage  made a mortgage loan to the  Partnership  in the
     principal   sum  Fourteen   Million  Four   Thousand  and  no/100   dollars
     ($14,004,000.00) which loan was coinsured by the U.S. Department of Housing
     and Urban Development (the "Coinsured loan");

     WHEREAS,  the  Coinsured  Loan was made with  respect to the Winward  Lakes
     Apartments  (the  "Project")  located in  Pompano  Beach,  Broward  County,
     Florida on the land described in Exhibit A attached hereto (the "Property")
     and the terms of the following coinsured loan documents:

     A. The  Coinsured  Loan is  evidenced  by a  certain  Mortgage  note  ("the
     Coinsured  Note") dated December 28, 1990 from the Partnership to the First
     Mortgage in the original principal sum of $14,004,000.00;

     B. The repayment of the  indebtedness  evidenced by the  Coinsured  Note is
     secured by, among other things,  (I) a Mortgage dated December 28, 1990 and
     recorded in the Official Records of Broward County,  Florida in Book 18030,
     Page 946 ("the  Coinsured  Mortgage");  (II) a Regulatory  Agreement  ("the
     Regulatory  Agreement")  dated  December  28,  1990  and  recorded  in said
     Official  Records  in  book  18030,  the  Page  957 ( the  Coinsured  Note,
     Coinsured Mortgage and Regulatory Agreement are collectively referred to as
     the "First Mortgage Loan Documents");

     WHEREAS, the First Mortgage obtained funding for the Coinsured Loan through
     purchase of a Government  National Mortgage  Association  ("GNMA") Mortgage
     backed  Security  ("MBS") by GIT. The interest  rates on the Coinsured Loan
     were below the then  prevailing  interest  rates for  comparable  loans and
     securities  and GIT was unwilling to  participate  in the  Coinsured  Loan,
     unless the Partnership agreed to pay additional interest to GIT;

     WHEREAS,  the Partnership agreed to pay additional interest to GIT pursuant
     to a Subordinated  Promissory  note ("the  Subordinated  Note") made by the
     Partnership in favor of GIT which is secured by a Subordinated  Multifamily
     Mortgage,  Assignment of Rents and Security  Agreement  ("the  Subordinated
     Mortgage")  dated December 28, 1990 and recorded in the Official Records of
     Broward County, Florida on January 2, 1991 under Clerk's File No. 91-002643
     (collectively, the "Subordinated Loan Documents");

     WHEREAS,  the Partners have executed an  Additional  Loan  Agreement and an
     Additional Loan Note evidencing additional  indebtedness of the Partners to
     GIT  of  Two  Million  Four  Hundred   Seventy-One   Thousand  Two  Hundred
     Ninety-Four and no/100 Dollars  ($2,471,294.00)  ("Additional  Loan") which
     Additional  Loan is  secured  by Pledge  and  Security  Agreements  and UCC
     financing   statements   with  all  documents   dated   December  28,  1990
     (collectively, the "Additional Loan Documents")

     WHEREAS,  the  Project  has  experienced  financial  difficulties  and  the
     Partnership  and Partners have requested  assistance from GIT in regards to
     their obligation under the Coinsured Loan Documents and The Additional Loan
     Documents;

     WHEREAS,  the  Partnership,  the Partners,  the First Mortgage and GIT have
     agreed to modify the  Subordinated  Note, the Additional Loan Agreement and
     the  Additional   Loan  Note  based  upon  GIT's  providing  the  financial
     assistance described herein; and

     WHEREAS,  the  Partnership,  the Partners,  the First Mortgage and GIT have
     reached an agreement the terms and  conditions  of which  agreement are set
     forth herein.

     NOW THEREFORE, in consideration of the foregoing and Ten and no/100 Dollars
     ($10.00) in hand paid to GIT,  and other good and  valuable  consideration,
     the receipt and sufficiency of which is hereby  acknowledged,  intending to
     be legally bound, the Partnership, the Partners, the First Mortgage and GIT
     hereby agree as follows:

     1.   Recitals Incorporated.  The foregoing Recitals are hereby incorporated
          herein to the same extent as hereafter fully set forth

     2.   Interest Rebate.  The Partnership  shall continue to make monthly debt
          service payments in accordance with Coinsured Note.  Effective January
          1, 1997 and during a period of forty-eight (48) months thereafter (the
          "Workout  Term"),  GIT will  rebate  monthly  to the  Partnership  the
          difference  between (I) the interest rate (i.e.  8.75%)  payable under
          the Coinsured Note (the "Original  Rate") and (ii) the following rates
          for each of the  following  calendar  years  during the  Workout  Term
          )collectively, the "Modified Rate");
<TABLE>
<CAPTION>

                  <S>                       <C>                        <C>
                  Calendar Year             Modified Rate              Interest Rebate

                  1997                      6.75%                      $275,298 (2%)
                  1998                      7.75%                      $137,028 (1%)
                  1999                      7.75%                      $136.352 (1%)
                  2000                      7.75%                      $135,613 (1%)
                  TOTAL                                                     $684,291
</TABLE>

     The  difference  between the Original  Rate and Modified Rate for each such
     monthly payment in the aggregate  (hereinafter the "Interest Rebate") shall
     be  treated  as a loan by GIT to the  Partnership  and  shall be  repaid as
     provided in Section 6 below.

     3. Additional  Equity  Contribution  The  Partnership  and/or Partners will
     provide upon execution of this agreement an additional equity  contribution
     of $133,036 to be deposited in the Project  operating  accountable and used
     for such Project related costs as may be approved by GIT

     4. Payment of participating Income and Base Interest


     Section 1. A. Of the  Subordinated  Promissory  Note is hereby  amended  to
          include the following paragraph:

     The Maker agrees that Surplus shall be  calculated  in accordance  with the
     Regulatory  Agreement  twice each year as of June 30 and  December 31 until
     Coinsured Loan and Additional Loan have been paid in full. Furthermore, the
     Maker agrees that the Holder's 50% share of any distributable  Surplus Cash
     calculated as of (a) June 30 shall be  distributed  no later than August 31
     of the same year,  or (b)  December  31 shall be  distibuted  no later than
     March 31 of next year.

     Section 2. A. of the  Additional  Loan  Agreement is hereby  deleted in its
          entirety and the following is substituted in lieu thereof:

     A.   Base  Interest  shall be payable  only to the  extent  that the Holder
          receives 50% of  distributable  Surplus Cash at  participating  Income
          Interest pursuant to the Subordinated Promissory Note. Any unpaid Base
          Interest pursuant to the Subordinated Promissory Note. Any unpaid base
          Interest  shall accrue and shall be repaid as provided in Section 6 of
          the Modification Agreement dated May___, 1997

     5.  Definition  and  Payment of  Preferred  Interest.  Section 1 (n) of the
     Additional  Loan  Agreement is deleted in it's entirety and  substituted in
     lieu thereof is the following:

     (n) "Preferred  Interest"  shall mean and refer to the amount which,  as of
     the time of  calculation,  would be  equal to a  cumulative,  noncompounded
     preferred  return to the  Holder  of ten  percent  (10%)  per annum  simple
     interest from the date of Final Endorsement to the date of such calculation
     on the outstanding  balance of the Holder's total capital investment in the
     Coinsured  Loan and the  Additional  Loan,  which total capital  investment
     shall include the aggregate  principal amount of the Coinsured Loan and the
     Additional  Loan, which  outstanding  balance shall be reduced from time to
     time by the  aggregate  amount of any  prepayments  of principal  under the
     Coinsured  loan and/or the  Additional  Loan,  less (A)  interest  payments
     received  by holder  pursuant  to the GNMA MBS,  (B)  Participating  Income
     Interest  as set  forth in the  Subordinated  Note,  and (C) Base  Interest
     payments made under the Additional Loan Note.

     Section  2.B.  (I) of the  Additional  Loan  Agreement  is  deleted  in its
          entirety and the following is substituted in lieu thereof:

     (I) ten  percent  (10%) per annum  simple  interest  from the date of Final
     Endorsement to the date of calculation of such interest on the  outstanding
     balance of the Coinsured Loan plus the Additional Loan,  which  outstanding
     balance shall be reduced from time to time by the  aggregate  amount of any
     permitted   prepayments  of  principal  under  Coinsured  Loan  and/or  the
     Additional Loan, until the Coinsured Loan and the Additional Loan have been
     paid in full, less (a) interest payments received by the Holder pursuant to
     the GNMA MBS, (b) Participating Income Interest made under the Subordinated
     Note, and (c) Base Interest payments made under the Additional Loan Note.

     6. Payment  Obligation  Priorities:  Notwithstanding  any provisions to the
     contrary contained in the Subordinated  Note,  Additional Loan Agreement of
     the Additional Loan Note, the  undersigned  parties agree that the priority
     and  payment of the  following  shall occur upon the earlier of (I) Sale or
     Refinancing,  (II) prepayment of the Additional  Loan,  (III) prepayment of
     the Coinsured  Loan,  (IV) the  Accelerated  Maturity Date, (V) the Payment
     Date or (VI) the  Maturity of the  Coinsured  Loan and shall be paid in the
     following order:

     (a)  Payment of principal and interest of the Coinsured Loan
     (b)  Payment of the principal of the Additional Loan
     (c)  Payment of any unpaid or accrued Interest Rebate.
     (d)  Payment of any unpaid or accrued Base Interest
     (e)  Repayment of the  $133,036  deposit as provided in Section 3 above and
          any Capital  Call  advance  made by the  Partners in  accordance  with
          Section  3 of the  Additional  Loan  Agreement,  as  modified  by this
          Agreement, pari- passu with any Capital Call advance made by GIT.

     (f)  Any remaining  proceeds shall be split 50% to the  Partnership and 50%
          to GIT  until  all  Preferred  Interest  has been paid to GIT in full.
          Thereafter,   any  remaining  proceeds  shall  be  paid  100%  to  the
          Partnership.

     7. Reduction of Management Fee The Partnership  agrees that,  until payment
     in full of the Coinsured Loan and the  Additional  Loan, the management fee
     paid to the  Partnership  or any  affiliate  thereof  with  respect  to the
     management  of the Project  shall be limited to 3% of monthly  gross rental
     income.

     8. Certain  Definitions.  All Capitalized terms unless defined herein shall
     have the same meaning as the term is defined in the Subordinated  Note, the
     Additional Loan Agreement and the Additional Loan Note.

     9. Notice Requirement

     a)   All notices and other  communication  required or permitted under this
          Agreement  shall be in writing and, if mailed by prepaid United States
          first-class,  certified mail, return receipt  requested,  at any other
          than a general discontinuance of postal service due to strike, lockout
          or  otherwise,  shall be deemed to be  received  on the earlier of the
          date shown on the return  receipt or three (3) business days after the
          postmarked  day  thereof.  In  addition,   notices  hereunder  may  be
          delivered by hand or by overnight  courier,  in which event the notice
          shall be  deemed  effective  when  delivered.  All  notices  and other
          communications  under  this  Agreement  shall be given to the  parties
          hereto at the following addresses:






                               If the Partnership or the Partners

                               c/o McNab-K C 3 Limited Partnership
                               470 Atlantic Avenue
                               Boston, MA 02210
                               Attn: Steve Parthum

                               If to the First Mortgagee:

                               Love Funding Corporation
                               1220 Nineteenth Street, N.W.
                               Suite 801
                               Washington, DC 20036

                               If to GIT:

                               c/o Berkshire Mortgage Finance Corporation
                               470 Atlantic Avenue
                               Boston, MA 02210
                               Attn: Ronald F. Halpern

                               with a copy to:

                               Hinckley, Allen & Snyder
                               One Financial Center
                               Suite 4600
                               Boston, MA 02111
                               Attn: Scott E. Cooper, Esq.

     b)   Any party  hereto  may change the  address to which  notices  shall be
          directed  under this section 9 by giving ten (10) days written  notice
          of such change to the other parties.

     10. Loan  Documents Not Impaired  Except as expressly set forth herein with
     respect to the  Subordinated  Note, the  Additional  Loan Agreement and the
     Additional  Loan Note,  the agreements set forth herein are not intended to
     affect or alter the  obligations  of the  Partnership  and/or the  Partners
     under the First Mortgage  Documents,  the Subordinated Loan Document or the
     Additional  Loan Documents and this  Agreement  shall not be construed as a
     novation, renegotiation or release under any of these documents.

     11.  Representation  of Borrower.  The  Partnership and the Partners hereby
     acknowledge and confirm with the First Mortgage and GIT that:

     a)   They have no  offset,  counterclaim  or  defense  with  respect to the
          obligations  under the First Mortgage Loan Document,  the Subordinated
          Loan Documents or the Additional Loan Documents and to the extent that
          they have any  offset,  counterclaim  or defense  with  respect to the
          obligations  thereunder,  they hereby  waive and release  such offset,
          counterclaim and defense.

     b.   The  Partnership  and the Partners  ratify and affirm all  obligations
          under  the  First  Mortgage  Loan  Documents,  the  Subordinated  Loan
          Documents and the Additional Loan Documents.

     c.   Except for the matters expressly set forth herein, the Partnership and
          the Partners hereby release and forever  discharge the First Mortgagee
          and GIT and all its directors,  officers,  employees,  administrators,
          agents subsidiaries,  affiliates, appraisers, inspectors, accountants,
          attorneys,  successors,  and assigns from any and all present existing
          causes of action, demands, claims, debts, accounts liabilities, costs,
          expenses,  contracts,  promises,  agreements  and  damages  whatsoever
          (hereinafter   referred  to  individually   and  collectively  as  the
          "Claims")  which  related to the First  Mortgage Loan  Documents,  the
          Subordinated  Loan Documents  and/or the Additional Loan Documents and
          also including,  without limitation, any and all Claims arising out of
          or  relating  to the  exercise  by the First  Mortgagee  or GIT of any
          rights pursuant thereto.

     12. Execution in Counterparts. This Agreement may be signed in counterparts
     by the  parties and shall be  effective  upon the  signature  of the second
     party to sign the Agreement.

     13. Binding  Effect.  The terms and  provisions of this Agreement  shall be
     binding upon the parties hereto and their heirs, successors and assigns.

     14. Time of Essence. Time is of the essence in this Agreement.

     15.  Governing Law. This Agreement shall be construed under the laws of the
     State of Florida  and if any  provisions  of this  Agreement  are held by a
     court of competent  jurisdiction to be illegal,  invalid or  unenforceable,
     then such illegality,  invalidity or unenforceability  shall not affect the
     legality,  validity  or  enforceability  of the  other  provisions  of this
     Agreement.

     IN WITNESS WHEREOF,  the undersigned parties have caused this instrument to
     be executed as of the day, month and year first written above.

PARTNERSHIP:

McNab-K C 3 Limited Partnership, a
Massachusetts limited partnership

By:      Krupp GP, Inc. a Massachusetts
         corporation, general partner

By:      __________________________
         Name:
         Title

<PAGE>

PARTNERS

Krupp GP, Inc., a Massachusetts Corporation

By: _________________________

    Name:
    Title


    George Krupp, individually



    Douglas Krupp, individually


GIT:

Krupp Government Income Trust, a
Massachusetts business trust

By:      Berkshire Mortgage Advisors Limited
         Partnership, its advisor

By:      BRF Corporation, its general partner

By:
         Name:    Ronald F. Halpern
         Title:

FIRST MORTGAGEE

Love Funding Corporation

By:
         Name:
         Title:

<PAGE>




                                     Exhibit "A"

                                  LEGAL DESCRIPTION


     ALL OF TRACT A, ACCORDING TO THE PLAT OF McNAB ESTATES, AS RECORDED IN PLAT
     BOOK 142 AT PAGE 29 OF THE PUBLIC RECORES OF BROWARD COUNTY, FLORIDA



                                         RECORDED IN THE OFFICIAL RECORDS BOOK
                                            OF BROWARD COUNTY, FLORIDA
                                                     L.A. HESTER
                                                 COUNTY ADMINISTRATOR













BK 18030PG0956

246CP4071E