SECURITIES AND EXCHANGE COMMISSION
                   Washington, D.C. 20549
                              
                        FORM 10-QSB
                              
                              
[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
            THE SECURITIES EXCHANGE ACT of 1934
                              
      For the Quarterly Period Ended February 28, 1997
                              
    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 February 28, 1997, 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 to June, 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.

              



                          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.
<PAGE>
                         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:       May 24, 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
                    
                                           May 9, 1997
                    
  FEDERAL AFFORDABLE HOUSING
          P.O. BOX 6163
          CLEARWATER, FL 34618
             
              We  have  compiled  the  accompanying  balance  sheet  of
          FEDERAL AFFORDABLE HOUSING as of February 28, 1997,  and  the
          related statement of revenues  and  expenses  for  the  three
          months and  nine  months  then  ended,  and  the  comparative
          statement of income for the  three  months  and  nine  months
          ended February 28, 1997 and 1996, and the statement  of  cash
          flows for the three months and  nine  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
                              FEBRUARY 28, 1997
                    
                    
                    
                                    ASSETS
                    
CURRENT ASSETS      
   CASH IN BANK - SUNTRUST        $     7,567.75
   CD - SUN BANK                      300,000.00
   DUE FROM SUNCOAST FOOD              67,271.38
   LAND HELD FOR DEVELOPMENT           58,512.00
  COSTS- 35 LOTS                      175,915.61
   HOUSE CONSTRUCTION IN PROCESS      113,785.49
   DADE CITY CONSTRUCTION IN PROGRESS   1,907.20
                                      ------------
   TOTAL CURRENT ASSETS                                    $   724,959.43
                    
OTHER ASSETS        
   REGISTRATION STATEMENT COSTS        55,672.64
   DEPOSIT - UTILITY                      423.53
                                      -------------
   TOTAL OTHER ASSETS                                           56,096.17
                                                              -------------
   TOTAL ASSETS                                            $   781,055.60
                                                              =============
                    
                    
                    
                    
                       
                    
                     SEE ACCOUNTANT'S COMPILATION REPORT
                        J. MICHAEL DAILY & ASSOCIATES
                                CLEARWATER, FL






FEDERAL AFFORDABLE HOUSING CORPORATION
                                BALANCE SHEET
                              FEBRUARY 28, 1997
                    
                    
                    
                     LIABILITIES AND STOCKHOLDERS' EQUITY
                    
CURRENT LIABILITIES 
   DUE TO REMPROP              $    29,719.70
   NOTE PAYABLE - R. METZ            8,931.00
   COMMERCIAL LOAN-SUNTRUST        266,074.00
   CONST. LOAN, SUNTRUST #21        47,700.00
   CONST. LOAN, SUNTRUST #22        15,906.00
                                  -------------
   TOTAL CURRENT LIABILITIES                                $   368,330.70
                                                              -------------
   TOTAL LIABILITIES                                            368,330.70
                    
EQUITY              
   COMMON STOCK                     486,887.00
   RETAINED EARNINGS                (48,544.86)
   CURRENT/YTD PROFIT OR LOSS       (25,617.24)
                                  -------------
   TOTAL EQUITY                                                 412,724.90
                                                               -------------
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY               $   781,055.60
                                                               =============
                    
                    
                              
                    
                              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 AND NINE MONTHS ENDED
                              FEBRUARY 28, 1997
                    
                          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        12,847.50    0.00
   BANK CHARGES          125.43    0.00           318.11    0.00
   GAS AND OIL           507.31    0.00           547.30    0.00
   INTEREST EXPENSE    4,423.95    0.00        11,706.04    0.00
   LEGAL AND 
     ACCOUNTING        2,070.00    0.00         7,915.86    0.00
   RENT                    0.00    0.00         1,070.00    0.00
  TELEPHONE               70.54    0.00            70.54    0.00
   UTILITIES             398.74    0.00         1,882.84    0.00
                         -------  ------         -------   ------
   TOTAL EXPENSES     11,878.47    0.00        36,358.19    0.00
                        --------  ------       ---------   ------
   INCOME FROM 
     OPERATIONS      (11,878.47)  (0.00)      (36,358.19)  (0.00)
                     -----------  ------      ----------   ------
OTHER INCOME        
   INTEREST INCOME 
     - CD              3,549.47    0.00        10,740.95    0.00
                     ----------   ------      ----------   ------
   TOTAL OTHER 
    INCOME             3,549.47    0.00        10,740.95    0.00
                     -----------  ------      ----------    ------
   NET INCOME       $ (8,329.00)  (0.00)     $(25,617.24)  (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 AND NINE MONTHS ENDED
 FEBRUARY 28, 1997 AND 1996
                    
                  1997                 1996             1997           1996
             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
             -----   ------      ------  ------    ------  ------ ------- ------

ADVERTISING  0.00     0.00        0.00    0.00      0.00    0.00  66.81     0.00
AMORTIZATION 
 OF ORG. 
  EXPENSE  4,282.50    0.00       0.00    0.00  12,847.50   0.00   0.00     0.00
BANK CHARGES 125.43    0.00      18.97    0.00     318.11   0.00 137.52     0.00
GAS AND OIL  507.31    0.00       0.00    0.00     547.30   0.00   0.00     0.00
INTEREST 
 EXPENSE   4,423.95    0.00   1,096.78    0.00  11,706.04   0.00 1,096.78   0.00
LEGAL AND
 ACCOUNTING2,070.00    0.00   1,200.00    0.00   7,915.86   0.00 1,700.00   0.00
MANAGEMENT
 FEES          0.00    0.00   7,500.00    0.00       0.00   0.00 24,000.00  0.00
OFFICE EXPENSE 0.00    0.00     211.32    0.00       0.00   0.00   715.67   0.00
RENT           0.00    0.00   2,105.00    0.00   1,070.00   0.00  5,315.00  0.00
TAXES AND 
 LICENSES      0.00    0.00       0.00    0.00       0.00   0.00  7,029.33  0.00
TELEPHONE     70.54    0.00     386.42    0.00      70.54   0.00   951.29   0.00
UTILITIES    398.74    0.00     264.30    0.00   1,882.84   0.00  1,396.01  0.00
            --------  ------   --------   -----   --------  ----- -------- -----
TOTAL 
 EXPENSES 11,878.47    0.00  12,782.79    0.00   36,358.19  0.00 42,408.41  0.00
          ---------    ----- ---------    ----- ----------  ---- ---------  ----
INCOME FROM
 OPERATIONS(11,878.47)(0.00)(12,782.79) (0.00)(36,358.19)(0.00)(42,408.41)(0.00)
           ---------- ------  -------   ------ --------  ------ --------- ------
OTHER INCOME        
INTEREST INCOME 
  - CD       3,549.47  0.00   3,857.89   0.00  10,740.95   0.00 10,284.61 0.00
INTEREST INCOME
   - ESCROW      0.00  0.00       0.00   0.00       0.00   0.00  1,691.46 0.00
ESCROW FEES      0.00  0.00       0.00   0.00       0.00   0.00   (813.76)(0.00)
              ------  ------  --------  ------  -------  ------  --------  -----
TOTAL OTHER
  INCOME     3,549.47  0.00   3,857.89   0.00   10,740.95  0.00  11,162.31 0.00
            ---------  ----- ---------  ------ ----------  ----- -------- -----
NET 
INCOME $(8,329.00)(0.00)$(8,924.90)( 0.00 )$(25,617.24)(0.00)$(31,246.10)(0.00) 
       ========== ======  =======    ====== =========  ======   =======  ====== 
             
                    
        
                     SEE ACCOUNTANT'S COMPILATION REPORT
                         J. MICHAEL DAILY & ASSOCIATES
                                   CLEARWATER, FL





                      FEDERAL AFFORDABLE HOUSING CORPORATION
                           STATEMENT OF CASH FLOWS
                    FOR THE PERIOD ENDED FEBRUARY 28, 1997

                                          CURRENT PERIOD     YEAR TO DATE
                                          ______________     ____________
CASH FLOWS FROM OPERATING ACTIVITIES
___________________________________
     NET INCOME (LOSS)                   $  (8,329.00)      $  (25,617.24)
     ADJUSTMENTS TO RECONCILE NET INCOME TO
       NET CASH PROVIDED:
       AMORTIZATION - DEBITS TO INCOME       4,282.50           12,847.50
       DECREASE (INCREASE) IN OPERATING ASSETS:
         ACCOUNTS RECEIVABLE               (12,847.18)         (31,422.63)
         INVENTORY                         (68,144.84)        (122,816.41)
         OTHER OPERATIONS-RELATED ASSETS         0.00               31.47       
                                            __________       _____________
  TOTAL ADJUSTMENTS                        (76,709.52)        (141,360.07)
                                         _____________       _____________
     NET CASH FLOW FROM OPERATIONS         (85,038.52)        (166,977.31)
                                        
   CASH FLOWS FROM FINANCING ACTIVITIES
   ____________________________________
     INFLOWS:       
       INCREASES IN MISC PAYABLE             29,719.70           29,719.70
       INCREASES IN SHORT-TERM NOTES PAYABLE 63,606.00          143,606.00
                                           _____________       _____________
     NET CASH FROM FINANCING ACTIVITIES      93,325.70          173,325.70
                                           _____________       _____________
                    
   NET INCREASE (DECR) IN CASH & EQUIVALENTS  8,287.18            6,348.39
   BEGINNING CASH AND EQUIVALENTS              (719.43)           1,219.36
                                            _____________      _____________
   ENDING CASH & CASH EQUIVALENTS         $   7,567.75       $    7,567.75
                                            =============     =============
                                        
   DISCLOSURE OF ACCOUNTING POLICY:
   ________________________________
  FOR PURPOSES OF THE STATEMENT OF CASH FLOWS, THE COMPANY CONSIDERS
ALL HIGHLY LIQUID DEBT INSTRUMENTS PURCHASED WITH A MATURITY OF THREE
MONTHS OR LESS TO BE CASH EQUIVALENTS.
        
                   SEE ACCOUNTANT'S COMPILATION REPORT
                        J. MICHAEL DAILY & ASSOCIATES
                                CLEARWATER, FL                   EXHIBIT 27.1