What Survived the FY2026 Budget
HUD entered 2026 under a continuing resolution before the Consolidated Appropriations Act of 2026 passed in March. The final bill maintained most core housing programs at or near FY2025 levels, with a few notable reductions. Community Development Block Grant (CDBG) was funded at $3.3 billion, down slightly from $3.45 billion in FY2024 but still the largest single source of flexible federal funding available to local governments. The Trump administration had proposed eliminating CDBG in its FY2026 budget request, citing the block grant's use for local priorities unrelated to housing construction. Congress rejected the elimination and maintained the program. HOME Investment Partnerships came in at $1.25 billion. Continuum of Care competitive grants for homeless services received $4.1 billion. The Choice Neighborhoods program, which funds large-scale public housing redevelopment, received $350 million. Emergency Solutions Grants (ESG) received $290 million. Two programs received notable cuts: Section 4 Capacity Building dropped to $35 million from $47 million, and the Fair Housing Initiatives Program (FHIP) was reduced to $22 million. DOGE reviews did not result in mass terminations of housing contracts the way they affected research and social services grants, largely because most housing grant recipients are state or local governments with stronger legal protections.
CDBG: The Flexible Block Grant That Cities Actually Use
CDBG is formula-distributed to entitlement communities (cities over 50,000 and urban counties over 200,000) and to states, which redistribute to smaller localities. Of the $3.3 billion, roughly $2.3 billion flows directly to 1,200+ entitlement communities. The remaining $1 billion goes to states. CDBG funds can be used for a broad range of activities as long as the activity meets one of three national objectives: benefit to low- and moderate-income persons, prevention or elimination of slums and blight, or urgent community needs. In practice, the national objectives requirement means at least 70% of CDBG funds must benefit low- and moderate-income people. Allowable CDBG activities include acquisition of real property, rehabilitation of residential and non-residential structures, construction of public facilities, public services (capped at 15% of the annual allocation), economic development, planning and administration (capped at 20%), and clearance and demolition. Housing rehabilitation is consistently the most common use, accounting for roughly 25% of total CDBG expenditures nationally. Entitlement communities do not compete for CDBG. They receive allocations annually based on a dual formula that considers population, poverty, overcrowded housing, housing age, and population growth lag relative to metropolitan areas. The smallest entitlement communities receive around $300,000 annually. Larger cities like New York, Chicago, and Los Angeles receive $150 million to $175 million each. Non-entitlement jurisdictions must apply through their state CDBG program. Each state runs its own competition with its own priorities. Small cities and rural areas dominate state CDBG. Eligible applicants include local governments, not nonprofits directly, though nonprofits frequently receive sub-awards from local government grantees to deliver services. Applications for state CDBG programs vary by state but typically open in the fall for the following program year. Contact your state's housing finance agency or community development office for specific timelines and thresholds.
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HOME Investment Partnerships: Rental and Homeownership
HOME funds go to states and participating jurisdictions (PJs) -- local governments that receive formula allocations. There are approximately 650 PJs. The program requires a 25% match from non-federal sources, one of the highest match requirements of any HUD program. HOME can fund four activities: homebuyer assistance, homeowner rehabilitation, rental housing development, and tenant-based rental assistance. Rental housing development and acquisition-rehabilitation are the most common uses, accounting for over 60% of HOME expenditures. HOME funds frequently layer with Low-Income Housing Tax Credits (LIHTC) to make affordable rental projects pencil out financially. Under HOME, at least 15% of a PJ's allocation must go to Community Housing Development Organizations (CHDOs), which are nonprofits that meet HUD's definition of community-based housing organizations. CHDOs must maintain at least a third of their board drawn from the low-income community they serve and maintain development capacity. CHDO status can be a meaningful pathway for nonprofit housing developers who want a guaranteed slice of HOME funding. Rental units funded with HOME must remain affordable for a minimum period ranging from 5 years (for rehabilitation at less than $15,000 per unit) to 20 years (for new construction or major rehabilitation). Units must serve households at or below 60% of Area Median Income (AMI), and at least 90% of HOME units must serve households at or below 60% AMI. For homebuyer programs, HOME-assisted units must be occupied by households at or below 80% AMI. Resale and recapture restrictions ensure affordability is maintained after sale. HOME allocations for most PJs range from $500,000 to $3 million. Large states like California, Texas, and New York receive $30 million to $50 million annually and run their own competitive distributions to local governments and CHDOs.
Continuum of Care: The $4.1 Billion Competitive Homeless Funding System
CoC is the primary federal funding mechanism for homeless services. Unlike CDBG and HOME, CoC is fully competitive. HUD conducts a national competition annually. The process runs through local CoC bodies, which are regional planning organizations that coordinate homeless services across a geographic area. There are 400 CoCs across the country. The CoC competition process works differently from most federal grants. Individual providers (nonprofits, local governments) do not apply directly to HUD. Instead, they apply to their local CoC, which ranks projects and submits a consolidated application to HUD. This means your competitiveness depends not just on your project quality but on your local CoC's priorities and ranking methodology. Funding types available through CoC include Permanent Supportive Housing (PSH), which is the largest category at roughly 65% of awards. PSH pairs long-term rental assistance with support services for people with disabilities experiencing chronic homelessness. Rapid Rehousing receives about 18% of CoC funding and is shorter-term. Transitional housing, CoC planning, and Unified Funding Agency (UFA) costs make up the rest. Most CoC projects are renewal grants -- they funded existing programs in prior years and are being renewed. New projects compete for the remaining funds. HUD published its FY2025 CoC Notice of Funding Opportunity (NOFO) in February 2025 with approximately $400 million available for new projects and bonus funds. The FY2026 NOFO had not been published as of late March 2026 but was expected in Q2. New providers entering CoC should engage with their local CoC body now, before the NOFO drops. CoCs prioritize applicants they know. Many CoCs have waiting lists of providers wanting to enter the competition. The CoC locator is at hudexchange.info/programs/coc/coc-program-locator.
Choice Neighborhoods: Large-Scale Redevelopment Grants
Choice Neighborhoods provides grants to transform distressed public or HUD-assisted housing into mixed-income developments and simultaneously revitalize the surrounding neighborhood. Awards are large -- Planning Grants range from $500,000 to $1 million and Implementation Grants from $30 million to $50 million each. Choice Neighborhoods is highly competitive. HUD typically funds 2 to 5 Implementation Grants per year. The program requires a comprehensive neighborhood transformation plan that addresses housing, people, and neighborhood. Applicants must demonstrate substantial leveraging -- the federal dollar is expected to catalyze 3x to 5x in total investment. Eligible applicants are public housing authorities, local governments, and tribally designated housing entities. Nonprofit developers and community organizations can be co-applicants and primary partners but cannot be lead applicants on their own. The FY2025 Choice Neighborhoods Implementation Grant NOFO closed in October 2025. HUD has not published a FY2026 NOFO as of this writing. Given appropriations timing and the program's slow application cycle, a FY2026 competition is likely in late 2026. For organizations that want to compete, the path starts with a Planning Grant, which is easier to win and gives you 24 months to develop the full Implementation Grant proposal. Planning Grants for FY2026 were expected to be announced in mid-2026.
Emergency Solutions Grants and HOPWA
Emergency Solutions Grants (ESG) at $290 million flow through states and entitlement cities to fund street outreach, emergency shelter operations, homelessness prevention, and rapid rehousing for people experiencing or at risk of homelessness. ESG requires a 100% match from non-federal sources, the highest match requirement of any HUD program. HOPWA (Housing Opportunities for Persons with AIDS) provides $393 million for housing and services for low-income people living with HIV/AIDS. HOPWA flows to formula grantees (cities with high HIV caseloads) and through state distributions to smaller areas. Eligible activities include short-term and long-term tenant-based rental assistance, short-term housing facilities, supportive services, and housing information services. ESG and HOPWA operate on formula distribution to grantees, who then competitively sub-award to nonprofits. If your organization does shelter, rapid rehousing, or housing services for people with HIV, your pathway to federal funding is through your local ESG or HOPWA grantee, not a direct application to HUD.
Section 4 Capacity Building for Nonprofits
Section 4 Capacity Building for Affordable Housing and Community Development is one of the only HUD programs that gives grants directly to intermediary organizations -- specifically, national and regional nonprofits that in turn provide training and technical assistance to community development corporations (CDCs) and other local housing nonprofits. The current Section 4 grantees are Enterprise Community Partners, LISC (Local Initiatives Support Corporation), NeighborWorks America, Housing Assistance Council (rural housing), and National Urban League. These intermediaries receive multi-year grants totaling $35 million and distribute capacity building assistance to their affiliate networks. For a local CDC or housing nonprofit, Section 4 means: join the affiliate network of Enterprise, LISC, NeighborWorks, or HAC, and you can access technical assistance on development finance, project underwriting, organizational strengthening, and sometimes small grants. It is not a direct application to HUD. NeighborWorks America operates somewhat differently -- it is a congressionally chartered nonprofit, not an HUD grantee in the traditional sense, but it receives appropriations directly. Joining the NeighborWorks network provides access to training, a loan fund, and the NeighborWorks brand, which can help with other grant applications.
How to Qualify as a CHDO
Community Housing Development Organization (CHDO) status unlocks the set-aside in HOME allocations. Getting certified is worth the effort if your organization does housing development and your local HOME participating jurisdiction has CHDO funding available. To qualify, an organization must be a nonprofit, have a defined service area, have a history of providing housing to low-income residents, have at least one-third of its governing board drawn from residents of the community it serves or representatives of low-income residents, demonstrate development capacity (staff, experience, or consultants under contract), and meet financial accountability standards. CHDO certification is done by your local HOME participating jurisdiction (PJ), not by HUD. Apply to the PJ's housing department. The PJ makes the certification decision. Certifications are generally renewed annually. Not every community has active CHDO capacity building, and some PJs have difficulty getting CHDO set-asides spent because there are not enough certified CHDOs with development capacity. In those communities, getting CHDO-certified can mean immediate access to funding.
FY2026 NOFOs You Can Apply to Now
As of late March 2026, competitive HUD NOFOs with open or upcoming deadlines include: Fair Housing Initiatives Program (FHIP) -- The FY2026 FHIP NOFO was published in February 2026. Awards range from $200,000 to $800,000 for organizations conducting fair housing testing, education, outreach, and enforcement. Deadline was May 2026. Eligible applicants are private fair housing organizations, state and local governments, and nonprofit organizations. Lead Hazard Control and Healthy Homes -- HUD's Lead and Healthy Homes grant program funds local governments and nonprofits to identify and control lead hazards in private housing. FY2025 awards totaled $325 million. Awards range from $3 million to $12 million. FY2026 applications were expected to open spring 2026 through grants.gov. Youth Homelessness Demonstration Program (YHDP) -- YHDP funds coordinated community plans to end youth homelessness. Awards are $3 million to $8 million over two years. Applications go through CoC bodies. FY2026 round was expected mid-2026. Housing Counseling Program -- HUD funds housing counseling agencies to provide homebuyer education, foreclosure prevention counseling, and rental counseling. Awards range from $30,000 to $500,000. Applications open annually through grants.gov, typically January through March. Many agencies renew annually. For all HUD programs, sign up for HUD Exchange email alerts at hudexchange.info and create an account at grants.gov. Most HUD NOFOs require SAM.gov registration, which must be renewed annually.
LIHTC: The Tax Credit Program That Is Not a Grant
Low-Income Housing Tax Credits (LIHTC) are frequently discussed alongside HUD grants because they fund the same types of projects, but they are not a HUD program and not a grant. LIHTC is administered by the IRS and allocated by state housing finance agencies. HUD data shows that LIHTC is responsible for more affordable rental units than all HUD housing programs combined. Since 1986, LIHTC has financed approximately 3.7 million affordable rental units. In 2026, the program allocates roughly $14 billion in tax credits annually. For a housing developer, LIHTC and HOME are complementary. HOME funds pay for soft costs and fill financing gaps. LIHTC raises equity from institutional investors. A typical affordable rental project might have 40% LIHTC equity, 20% HOME soft financing, 30% construction debt, and 10% other sources. To access LIHTC, apply to your state housing finance agency's Qualified Allocation Plan (QAP) process. Each state sets its own priorities and scoring criteria. Competitive factors typically include location near transit and services, rent affordability depth, developer experience, leveraging, and community support.
Practical Starting Points by Organization Type
If you are a municipality or county government: Start with CDBG if you are an entitlement community. If you are not, contact your state housing department about state CDBG. For homeless systems, engage with your local CoC. For large-scale public housing redevelopment, explore Choice Neighborhoods Planning Grants as a first step. If you are a nonprofit housing developer or CDC: Get CHDO certified through your local HOME participating jurisdiction. Affiliate with LISC, Enterprise, NeighborWorks, or HAC to access Section 4 capacity building. Apply to your state housing finance agency for LIHTC allocations. Work with your CoC to enter the CoC competition. If you are a homeless services organization: Engage immediately with your local CoC. Attend CoC planning meetings, demonstrate your track record, and understand how the local scoring and ranking works before the NOFO drops. ESG sub-awards from your city or county are also available without going through the CoC. If you are a fair housing organization: Apply to FHIP. If you do not currently have FHIP funding, connect with a current FHIP grantee in your region as a subrecipient before applying directly. If you are a housing counseling agency: HUD certification as an approved housing counseling agency is required before applying for Housing Counseling Program grants. The certification process takes 3 to 6 months. The HUD certification application is at hudexchange.info.