The Trump Administration recently released additional details on its Fiscal Year 2026 budget request. These new materials include an appendix from the Office of Management and Budget and "congressional justifications” for individual agencies such as the U.S. Departments of Housing and Urban Development (HUD). The materials expand on the limited information provided earlier in the so-called “skinny” budget. However, what has been released doesn't include descriptions of tax proposals and potential housing finance reform ideas. 

According to the newly published budget documents, the proposed overall funding for HUD would drop dramatically from $89.1 billion in FY25 to $43.5 billion in FY26, marking a 51 percent reduction. The administration justifies these cuts by arguing for reduced federal intervention and increased state flexibility. However, housing advocates and industry professionals warn that these cuts would significantly reduce critical supports that keep affordable housing viable.

The released details confirm earlier proposed cuts and structural shifts that would reshape the federal government's role in affordable housing. For LIHTC site owners reliant on HOME program funding, the additional budget details underscore ongoing threats, though the details don't revise the prior proposal to eliminate the HOME program in its entirety.

State Rental Assistance Block Grant

The most prominent feature of the FY26 budget is the proposal to consolidate several vital rental assistance programs into a single state rental assistance block grant. The housing programs for consolidation include Housing Choice Vouchers, project-based rental assistance, public housing, and programs dedicated to elderly and disabled residents. The newly created grant would be funded at approximately $31.8 billion, which is dramatically less than the $63 billion these programs collectively received in FY25.

HOME Program

HUD’s HOME investment partnerships program is a critical funding source that many affordable housing sites layer with LIHTC equity. HOME currently provides $1.25 billion annually in gap financing essential for affordable housing sites nationwide. Despite significant industry and bipartisan opposition to the program's elimination, the Trump administration's additional budget materials have reiterated its intent to terminate HOME entirely. The administration cites regulatory burdens and unspent HOME Investment Partnerships American Rescue Plan Program (HOME-ARP) funds as reasons to end ongoing support. 

The industry has highlighted, however, that HOME-ARP is a distinct, one-time initiative not comparable to the broader, ongoing HOME program. The HOME-ARP is a federal initiative providing $5 billion in funding to assist individuals and families who are homeless, at risk of homelessness, or fleeing domestic violence, dating violence, sexual assault, stalking, or human trafficking. The HOME-ARP program is funded with a one-time allocation that has a 2030 expenditure deadline. HOME-ARP can't replace the broader, annually funded HOME program, which remains a critical gap-financing tool for many LIHTC projects.

Proposed Restrictions

The proposed state rental assistance block grant includes stringent new conditions, notably a two-year cap on assistance for able-bodied adults. And the administration hasn't proposed any alternative programmatic funding or restructuring for HOME, indicating no shift from the initial "skinny" budget position released last month. The persistent proposal to eliminate HOME funding underscores the administration's broader objective of drastically reducing federal housing responsibilities.

While these proposals clearly express the administration's intentions, it’s important to note that that congressional approval is required to enact these changes. Given the bipartisan concern already expressed, many aspects of this budget are unlikely to survive intact.