President Trump has released a blueprint for the Fiscal Year (FY) 2026 budget that proposes significant reductions or elimination of major housing and community development programs. The administration has stated an interest in lowering the cost of living and increasing housing supply, but the cuts laid out in this proposal would stunt construction and preservation and increase the cost of housing and utilities for families across America.
Enterprise CEO and President Shaun Donovan released a statement on the impact of the budget plan, stating that the proposed spending cuts “will only worsen the historic housing crisis and erase hard-fought progress toward building affordable housing.” Enterprise will continue to advocate for Congress to provide robust funding levels for affordable housing, community development, homelessness, and resilience programs in FY26.
Below is an overview of the housing and community development proposals in the president’s FY26 budget blueprint.
Elimination of Programs and Agencies
The president’s budget request proposes to zero out the funding for the following programs and agencies:
- HUD’s Community Development Block Grant (CDBG) program, which is one of the most flexible federal funding streams for community revitalization and supports support infrastructure, housing rehab, small business support, and public services — especially in low-income neighborhoods.
- HUD’s HOME Investment Partnership (HOME) program. HOME is the HUD’s flagship affordable housing production program, and it has been of the most flexible tools for states and localities to meet their affordable housing needs, including rental home production, and preservation, single-family home construction, homeowner rehabilitation, and tenant-based rental assistance.
- HUD’s Pathways to Removing Obstacles (PRO) Housing grants, which provide competitive funding to state, local, and tribal governments to support zoning modernization.
- HUD’s Fair Housing Initiatives Program, which supports nonprofit organizations that investigate housing discrimination, assist victims, and educate the public about fair housing rights. This proposal would also eliminate funding for the National Fair Housing Training Academy, which provides training for fair housing professionals across the country. The proposal does maintain funding for the Fair Housing Assistance program, which provides funding to state and local government agencies to enforce fair housing laws.
- HHS’s Low Income Home Energy Assistance Program (LIHEAP), which helps low-income households afford their home energy costs, provides emergency assistance for utility shutoffs, and funds weatherization and energy efficiency upgrades.
- Neighborhood Reinvestment Corporation, commonly known as NeighborWorks America, which is a congressionally chartered nonprofit organization that helps create affordable housing, provides financial counseling, and supports community development across the U.S.
- U.S. Interagency Council on Homelessness (USICH). USICH is a federal agency responsible for coordinating the national response to homelessness, aiming to reduce and ultimately end homelessness across the country.
Significant Reduction and Consolidation of Programs
The proposal also seeks to significantly reduce funding, limit the use, and/or consolidate programs. The programs impacted include:
HUD’s Rental Assistance Programs
The budget proposes to significantly reduce and consolidate all of HUD’s rental assistance programs (including Tenant-Based Rental Assistance, Project-Based Rental Assistance, Public Housing, Section 202 Housing for the Elderly, Section 811 Housing for Persons for Disabilities) into a state-based formula grant program. This State Rental Assistance Block Grant program would institute a two-year cap on rental assistance for able-bodied adults.
The blueprint expresses hope that this model would incentivize states and the private sector to provide affordable housing in conjunction with the administration opening up federal land for this purpose. According to the proposal, this State Rental Assistance Block Grant program would lead to a $26 billion decrease for HUD’s rental assistance programs.
HUD’s Native American Programs
The budget proposes to reduce the Native American programs by $479 million, eliminating the competitive portion of the Indian Housing Block Grant program (IHBG), the Indian Community Development Block Grant program (ICDBG), and the Native Hawaiian Housing Block Grant program. While the budget says that “all available resources” should be focused on the formula IHBG program, the proposed cuts exceed current appropriations for the targeted programs, raising questions about whether cuts to formula grants are being proposed.
HUD’s Native American programs are the primary federal resources dedicated to addressing housing and infrastructure challenges in tribal communities. Through programs like IHBG and ICDBG, HUD helps address severe housing shortages, overcrowding, and inadequate infrastructure that persist at disproportionately high rates in Indian Country. These programs are essential to ensuring safe, affordable housing and healthy living conditions for Native American families and are a vital part of the federal government’s trust responsibility to tribal nations.
The Native Hawaiian Housing Block Grant is a separate program and is the only federal housing program specifically for Native Hawaiians, playing a critical role in advancing homeownership, housing stability, and economic opportunity within the community.
HUD’s Homeless Assistance Grants (HAG) and Housing Opportunities for Persons with AIDS (HOPWA)
The proposal would consolidate the Continuum of Care (CoC) program and HOPWA programs into the Emergency Solutions Grants (ESG) program that would be administered by state and local governments. Overall, it would reduce funding for the Homeless Assistance Grants programs and HOPWA by $532 million.
HAG programs are the federal government’s largest source of funding for connecting people experiencing or at-risk of experiencing homelessness to the housing and supportive services they need. It includes two core programs, the CoC program — which funds housing and system coordination for people experiencing homelessness — and ESG program that is geared toward outreach, short-term, emergency shelter, rapid rehousing, and early prevention. Both programs are essential — and distinct — in responding to the housing needs of people in communities, including older adults, families with young children, and people fleeing domestic violence.
HOPWA is an entirely separate program from HAG and tailored to support people living with HIV/AIDS through housing and health-related services, addressing unique medical and stability needs. The two programs address the needs of distinct groups and provide different services.
USDA’s Rural Development Programs
The President’s Budget Request does provide enough funding to renew all Section 521 rental assistance contracts, which ensures that low-income families can afford safe and stable housing in rural communities. However, many of the USDA’s rural development programs were slated to be cut, including:
- Section 502 Single Family Housing Direct Loans, which provide low-income and very low-income families in eligible rural areas with long-term, subsidized mortgage financing to buy, build, or improve a home as their primary residence.
- Section 523 Self-Help housing grants, which provide grants to nonprofit organizations to support sweat equity construction.
Rural communities already face severe shortages of safe, affordable housing, and USDA programs are often the only source of financing for low-income renters and homeowners in these areas.
Treasury’s Community Development Financial Institutions (CDFI) Funding
Enterprise is pleased to see that the President’s Budget Request proposes $100 million for a new Rural Financial Award program to support investment and spur economic development in rural communities. The proposal does, however, seek to cut $291 million to the CDFI Fund program overall —which is most of its budget given that it was funded at $324 million in FY25 — leaving the remaining to support the closeout of prior awards, maintaining the CDFI certification process, and continuation of the New Markets Tax Credit and Bond Guarantee Programs. The New Markets Tax Credit is a federal tax credit designed to encourage investment in low-income communities and the Bond Guarantee Program provides long-term financing to CDFIs that fund large-scale community and economic development projects.
This proposal would lead to limited funding for other CDFI Fund programs which provide financial and technical assistances to both large and small certified CDFIs, funding for Native American CDFIs, and funding to administer the Capital Magnet Fund program—which provides grants to support affordable housing development.
Moving Forward
Full details of the FY26 President’s Budget Request are expected to be released at the end of May. For an overview of how this spending proposal compares to FY24 and FY25 spending legislation, please refer to our budget chart.
It is important to note that the President’s Budget Request is not legally binding. It does, however, serve as a starting point for the House and Senate to draft their bills for the upcoming fiscal year. With both the House and Senate Appropriations having their appropriations request deadlines at the end of the month, we expect to see appropriations legislation drafted quickly. To stay up to date on the appropriations process and other affordable housing and community development policy, subscribe to our daily Today in Housing newsletter and bi-weekly Capitol Express newsletter.
