SECURITIES AND EXCHANGE COMMISSION
                   Washington, D.C. 20549
                              
                        FORM 10-QSB
                              
                              
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
            THE SECURITIES EXCHANGE ACT of 1934
                              
       For the Quarterly Period Ended August 31, 1996
                              
             Commission File Number 33-67536-A
                                                                            



           FEDERAL AFFORDABLE HOUSING CORPORATION
(Exact Name of Small Business Issuer as specified in its charter)
                                                                            


           Minnesota                                     59-3169033            
 (State or other Jurisdiction of            (IRS Employer Identification No.)
   Incorporation or Organization)


                 1616 Gulf-to-Bay Boulevard
                Clearwater, Florida   34615
                       (813) 446-7981
    (Address of Principal Executive Offices, including 
              Zip Code, and telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section 
13 or 15(d) of the Exchange Act during the past 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       No   x    

As of August 31, 1996, there were 164,500 shares of Common Stock outstanding
and 74,500 Investor's Stock Purchase Warrants outstanding.

Transitional Small Business Disclosure Format: Yes   x   No      

<PAGE>
INFORMATION REQUIRED IN QUARTERLY REPORT OF TRANSITIONAL SMALL
BUSINESS
                          ISSUERS.
                              
                           PART I
                              
                   FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS

The information required by Item 310(b) of Regulation S-B is attached.
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
         OPERATION
         
[The Registrant is a transitional small business issuer which relied upon 
Alternative 2 under "Information Required in Annual Report of Transitional 
Small Business Issuers" in its most recent 10-KSB, and accordingly chooses 
here to update the response to Item 6(a)(3)(i) to Model B of Form 1-A.]

The Company completed its public offering on June 6, 1995, and received net 
proceeds of $359,336.

The Company's plan of operation for the twelve month period ended May 31, 1997 
calls for continued development of infrastructure scaled according to the net
proceeds of its offering and aggressive marketing.  Management believes that
the balance remaining of its net proceeds of $359,336 from its offering
is sufficient to carry out its plan of operation for the twelve months through 
May, 1997, without revenues from operations.

The Company anticipates that its major expense during the twelve month period 
ending May 31, 1997 will be infrastructure development.  Upon completion of 
infrastructure development, the Company anticipates that its only expenses 
will be executive compensation, real estate taxes, general
corporate purposes (including marketing and sales) and perhaps model home 
construction.  In addition, the Company plans to limit additional property 
acquisitions and infrastructure development until purchase agreements have
been executed for approximately half of the developed lots.  The Company 
believes that its plan of scaled infrastructure development and limitation 
on acquisition and development will enable it to operate with the net
proceeds of its public offering, without revenues from operations for the twelve
month period ending May 31, 1997.

The Company anticipates that it will hire additional commissioned sales persons 
prior toJune, 1997.  However, such sales persons will be paid only on a straight
commission basis and will be entitled to payment only upon revenue 
generation.  Accordingly, the Company does not expect that hiring such
commissioned sales persons will have a significant impact on the Company's 
ability to operate without revenues from operations.  

The Company does not intend to conduct any product research or development or 
to purchase or sell any plant or equipment prior to June, 1997.

Information concerning the comparable interim period for the preceding fiscal 
year is not included.




                          PART II
                              

ITEM 1.  LEGAL PROCEEDINGS 

              Not applicable.

ITEM 2.  CHANGES IN SECURITIES

              Not applicable.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

              Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OR SECURITIES HOLDERS

              Not applicable.

ITEM 5.  OTHER INFORMATION

              Not applicable.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

              (a) Exhibits.   See the Index to Exhibits, below.

              (b) Reports on Form 8-K.  Not applicable.
<PAGE>


INDEX TO EXHIBITS.

All of the items below are incorporated by reference to the Registrant's 
Registration Statement on Form SB-2, File No. 33-67536-A, effective March 10,
1995, except for Item 27.1, which is included with this filing.



                    Number                         Description

              4.1  Form of Common Stock Certificate
                   (Exhibit 4.A. of Form SB-2)

              4.2  Form of Investor's Stock Purchase Warrant Certificate
                   (Exhibit 4.B. of Form SB-2)

              10.1 Option Agreement between Registrant, RemProp, Inc.,
                   and Key Management, Inc.
                   (Exhibit 10.A. of Form SB-2)

              10.2 First Amendment to Option Agreement
                   (Exhibit 10.B. of Form SB-2)

              10.3 Second Amendment to Option Agreement
                   (Exhibit 10.C. of Form SB-2)

              10.4 Lease Agreement between Registrant and RemProp, Inc.
                   (Exhibit 10.D. of Form SB-2)

              27.1 Financial Data Schedule *

              99.1 Registrant's Registration Statement on Form SB-2, as
                   amended.
                   
              99.2 Registrant's Final Prospectus, dated March 10, 1995,
                   filed under Rule 424(b) of the 1933 Act.


*    Included with this report.  All other items are incoporated by reference 
to the Registrant's Form SB-2, File No. 33-67536-A, effective March 10, 1995.

                         SIGNATURES


In accordance with the requirements of the Exchange Act, the Registrant caused 
this report to be signed on its behalf by the undersigned, thereunto duly 
authorized. 


                             FEDERAL AFFORDABLE HOUSING CORPORATION  





Date:   June 4, 1997         By: /s/ Richard E. Metz                           
                             Richard E. Metz                                   
                             President, CEO                                   
                             (Principal Executive Officer)                    

 


                             By: /s/ Wayne A. Weyrauch                         
                             Wayne A. Weyrauch                                 
                             Vice President of Finance, CFO                 
                            (Principal Financial Officer,                      
                             Principal Accounting Officer)                
                 



          J. MICHAEL DAILY & ASSOCIATES
          1822 DREW STREET, SUITE 1
          CLEARWATER, FLORIDA 34625
                    
                    
                                             June 24, 1997
                    
                    
          FEDERAL AFFORDABLE HOUSING
          P.O. BOX 6163
          CLEARWATER, FL 34618
                    
                    
                    
              We  have  compiled  the  accompanying  balance  sheet  of
          FEDERAL AFFORDABLE HOUSING as of August  31,  1996,  and  the
          related statement of revenues  and  expenses  for  the  three
          months then ended, and the comparative  statement  of  income
          for the three months ended August 31, 1996 and 1995, and  the
          statement of cash flows for the three months  then  ended  in
          accordance with Statements on Standards  for  Accounting  and
          Review Services issued by the American Institute of Certified
          Public Accountants.
                    
              A compilation is limited to presenting  in  the  form  of
          financial statements information that is  the  representation
          of  management.  We  have  not  audited   or   reviewed   the
          accompanying financial statements and,  accordingly,  do  not
          express an opinion or any other form of assurance on them.
                    
              Management has elected to omit substantially all  of  the
          disclosures  required  by   generally   accepted   accounting
          principles. If the disclosures were included in the financial
          statements, they might influence the user's conclusions about
          the Company's financial position, results of  operations  and
          cash flows. Accordingly, these financial statements  are  not
          designed for those who are not informed about such matters.
                    
                    
                    
                    
                    
                    
          J. MICHAEL DAILY, CPA<PAGE>
               



                    FEDERAL AFFORDABLE HOUSING CORPORATION
                                BALANCE SHEET
                               AUGUST 31, 1996
                    
                  
                                    ASSETS
                    
CURRENT ASSETS      
   CASH IN BANK - AMSOUTH                   $       416.29
   CASH IN BANK - SUNTRUST                          891.87
   CD - SUN BANK                                300,000.00
   DUE FROM SUNCOAST FOOD                        44,878.38
   DUE FROM REMPROP                               1,630.84
   LAND HELD FOR DEVELOPMENT                     58,512.00
   COSTS- 35 LOTS                               175,612.96
   HOUSE CONSTRUCTION IN PROCESS                 26,433.13
   DADE CITY CONSTRUCTION IN PROGRESS               953.60
                                             -------------
   TOTAL CURRENT ASSETS                                        $   609,329.07
                    
OTHER ASSETS        
   REGISTRATION STATEMENT COSTS                  64,237.64
   DEPOSIT - UTILITY                                955.00
                                             -------------
   TOTAL OTHER ASSETS                                               65,192.64
                                                                -------------
   TOTAL ASSETS                                                $   674,521.71
                                                                =============
                    
                    

                    
                    
                    

                    
                    
                    
                     SEE ACCOUNTANT'S COMPILATION REPORT
                        J. MICHAEL DAILY & ASSOCIATES
                                CLEARWATER, FL<PAGE>
                             
                  



                         FEDERAL AFFORDABLE HOUSING CORPORATION
                                BALANCE SHEET
                               AUGUST 31, 1996
                    
                    
                    
                     LIABILITIES AND STOCKHOLDERS' EQUITY
                    
CURRENT LIABILITIES 
   NOTE PAYABLE - R. METZ                   $     8,931.00
   COMMERCIAL LOAN-SUNTRUST                     236,074.00
                                             -------------
   TOTAL CURRENT LIABILITIES                                   $   245,005.00
                    
                                                                -------------
   TOTAL LIABILITIES                                               245,005.00
                    
EQUITY              
   COMMON STOCK                                 486,887.00
   RETAINED EARNINGS                            (48,544.86)
   CURRENT/YTD PROFIT OR LOSS                    (8,825.43)
                                             -------------
   TOTAL EQUITY                                                    429,516.71
                                                                -------------
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $   674,521.71
                                                                =============
                    
                    

                    
                    
                    
                    
                    
                     SEE ACCOUNTANT'S COMPILATION REPORT
                        J. MICHAEL DAILY & ASSOCIATES
                                CLEARWATER, FL<PAGE>
       



                    FEDERAL AFFORDABLE HOUSING CORPORATION
                      STATEMENT OF REVENUES AND EXPENSES
                  FOR THE THREE MONTHS ENDED AUGUST 31, 1996
                    
                                         CURRENT PERIOD           YEAR TO DATE
                                        AMOUNT   PERCENT        AMOUNT   PERCENT
                    
                    
INCOME              
                                  -------------  ------   -------------  ------
   TOTAL INCOME                  $         0.00    0.00  $         0.00    0.00
                                  -------------  ------   -------------  ------
EXPENSES            
   AMORTIZATION OF ORG. EXPENSE        4,282.50    0.00        4,282.50    0.00
   BANK CHARGES                           64.54    0.00           64.54    0.00
   INTEREST EXPENSE                    3,031.41    0.00        3,031.41    0.00
   LEGAL AND ACCOUNTING                4,309.25    0.00        4,309.25    0.00
   UTILITIES                             785.77    0.00          785.77    0.00
                                  -------------  ------   -------------  ------
   TOTAL EXPENSES                     12,473.47    0.00       12,473.47    0.00
                                  -------------  ------   -------------  ------
   INCOME FROM OPERATIONS            (12,473.47)  (0.00)     (12,473.47)  (0.00)
                                  -------------  ------   -------------  ------
OTHER INCOME        
   INTEREST INCOME - CD                3,648.04    0.00        3,648.04    0.00
                                  -------------  ------   -------------  ------
   TOTAL OTHER INCOME                  3,648.04    0.00        3,648.04    0.00
                                  -------------  ------   -------------  ------
   NET INCOME                    $    (8,825.43)  (0.00) $    (8,825.43)  (0.00)
                                  =============  ======   =============  ======
                    

                    
                    
                    
                     SEE ACCOUNTANT'S COMPILATION REPORT
                        J. MICHAEL DAILY & ASSOCIATES
                                CLEARWATER, FL


                   FEDERAL AFFORDABLE HOUSING CORPORATION
         COMPARATIVE STATEMENT OF REVENUES AND EXPENSES
          FOR THE THREE MONTHS ENDED AUGUST 31, 1996 AND 1995
                    
  1996                    1995                    1996                  1995
CURRENT PERIOD          CURRENT PERIOD     YEAR TO DATE           YEAR TO DATE
AMOUNT   PERCENT        AMOUNT   PERCENT   AMOUNT  PERCENT      AMOUNT   PERCENT
                    
                    
INCOME              
------  ------         --------  ------   -------  ------     ---------  ------
TOTAL INCOME 
$ 0.00    0.00         $ 0.00    0.00     $ 0.00    0.00      $ 0.00      0.00
------  ------         --------  ------   -------  ------     ---------  ------
EXPENSES            
  ADVERTISING 
 0.00    0.00           66.81    0.00       0.00    0.00        66.81     0.00
  AMORTIZATION OF ORG. EXPENSE
4,282.50    0.00         0.00    0.00    4,282.50   0.00         0.00     0.00
  BANK CHARGES
   64.54    0.00        12.67    0.00       64.54   0.00        12.67     0.00
   INTEREST EXPENSE
3,031.41    0.00         0.00    0.00    3,031.41   0.00         0.00     0.00
  LEGAL AND ACCOUNTING 
4,309.25    0.00         0.00    0.00    4,309.25   0.00         0.00     0.00
  MANAGEMENT FEES
    0.00    0.00     9,000.00    0.00        0.00   0.00      9,000.00    0.00
  OFFICE EXPENSE 
    0.00    0.00        86.88    0.00        0.00   0.00         86.88    0.00
  RENT
    0.00    0.00     1,605.00    0.00        0.00   0.00      1,605.00    0.00
  TAXES AND LICENSES
    0.00    0.00     7,029.33    0.00        0.00   0.00      7,029.33    0.00
  TELEPHONE
    0.00    0.00       347.45    0.00        0.00   0.00        347.45    0.00
  UTILITIES
  785.77    0.00       410.87    0.00      785.77   0.00        410.87    0.00
 --------  ------    ---------  ------    -------  ------    ----------  ------
  TOTAL EXPENSES
12,473.47   0.00    18,559.01    0.00    12,473.47  0.00     18,559.01    0.00
---------  ------   ---------   ------   ---------  -----   -----------  -----
  INCOME FROM OPERATIONS
(12,473.47) (0.00) (18,559.01)  (0.00)  (12,473.47) (0.00)   (18,559.01)  (0.00)
----------- ------ -----------  ------  -----------  -----   ------------ ------
OTHER INCOME        
  INTEREST INCOME - CD
  3,648.04   0.00    2,562.27    0.00     3,648.04   0.00      2,562.27    0.00
  INTEREST INCOME - ESCROW
      0.00   0.00    1,691.46    0.00         0.00   0.00      1,691.46    0.00
  ESCROW FEES 
      0.00   0.00     (813.76)  (0.00)        0.00   0.00      (813.76)  (0.00)
 ---------- ------   ---------  ------     -------- ------    ----------  ------
  TOTAL OTHER INCOME
   3,648.04  0.00     3,439.97   0.00      3,648.04  0.00      3,439.97    0.00
 ---------- ------   ----------  ----     --------- ------    ----------  ------
  NET INCOME
$ (8,825.43)(0.00)   $(15,119.04)(0.00)   $(8,825.43)(0.00) $ (15,119.04) (0.00)
========== ======   =========== ======   ========== ======   ===========  ======
                    
                    

                    
                    
                         SEE ACCOUNTANT'S COMPILATION REPORT
                            J. MICHAEL DAILY & ASSOCIATES
                                    CLEARWATER, FL