President Trump’s recently released FY 2026 “skinny" budget outlines sweeping changes to federal housing policy, including major cuts to the U.S. Department of Housing and Urban Development (HUD) and a dramatic restructuring of rental assistance programs. While presidential budget requests are not binding and require Congressional approval, they serve as clear statements of an administration’s priorities and policy direction. The proposal signals operational challenges and funding shortfalls.

Cuts to Core HUD Programs 

The "skinny" budget proposes a 44 percent reduction in HUD funding compared to fiscal year 2025 levels, along with the consolidation of existing rental assistance programs such as Housing Choice Vouchers (HCVs), Project-Based Rental Assistance, and Section 202/811 into a single state-administered rental assistance block grant. Not only would this consolidation of major HUD rental assistance programs shift administrative responsibility to states, but it would also reduce federal oversight.

The proposal also eliminates the HOME Investment Partnerships Program and the Community Development Block Grant (CDBG) program, cutting $1.25 billion and $3.3 billion in funding, respectively. These programs have long provided essential gap financing for housing construction and local infrastructure improvements, particularly in smaller or lower-income communities.

Self-sufficiency programs such as Family Self-Sufficiency (FSS), Jobs Plus, and Resident Opportunities and Self-Sufficiency (ROSS) would be eliminated as well under the proposal. These resources have supported tenant stability, job training, and long-term economic mobility at HUD sites. These cuts would leave sites with fewer tools to help residents achieve economic independence or meet lease obligations.

In the homelessness arena, the budget proposes consolidating the Continuum of Care (CoC), Housing Opportunities for Persons with AIDS (HOPWA), and the Emergency Solutions Grant (ESG) programs into a single streamlined fund. Assistance would be limited to two years, regardless of a household’s condition or needs. Housing experts warn that imposing such strict time limits amid rising rents and scarce affordable units could trigger mass evictions and a surge in homelessness.

The Trump administration is promoting these changes as an effort to increase flexibility and reduce federal dependency, but housing professionals say the likely result would be significant disruption for millions of low-income renters.

The administration’s plan also institutes a two-year cap on rental assistance for “able-bodied adults,” with no clear exceptions for caretakers or those with non-visible disabilities.

Shift to State-Administered Block Grant Model

Although Congress is expected to resist many of these proposals, the “skinny” budget sets the boundaries for negotiation. The budget’s proposed block grant system would shift most federal housing responsibilities to state governments. In theory, states would gain the flexibility to design rental assistance programs tailored to local needs. However, in practice, this would mean replacing a nationally coordinated safety net with a patchwork of state-run systems. And many states don't currently have the infrastructure or experience to manage large-scale rental programs.

Public housing agencies that are used to federal standards would need to navigate a patchwork of state policies, build new administrative systems, and potentially redirect local funds to fill the gaps. Without transition funding or federal guidance, PHAs risk service disruptions and tenant confusion during implementation.

If enacted as proposed, Trump’s “skinny” budget would represent the most significant rollback of federal affordable housing support in decades. Bipartisan opposition is expected given the extent of the proposed reductions. And although the budget proposal is unlikely to be enacted in full, it sets the stage for contentious budget negotiations and offers a clear look at the Trump administration’s housing priorities, which embody a reduced role for HUD and a shift toward decentralized, state-managed aid.