White House FY26 Budget Request Would Reduce Critical Housing Supply & Related Affordable Housing Funding
On Friday, the White House released additional program-level details for its FY 2026 Budget request. The President’s budget proposal would reduce non-defense discretionary spending – which includes HUD, USDA Rural Housing Service, and CDFI funding – by 22% while keeping defense spending flat.
The Administration is proposing a cut or zeroing out of most of the key programs, relative to the FY25 enacted levels. For context, many of these proposed reductions were also proposed in the first Trump Administration and continued to be funded by appropriators. The President’s first budget request under his second term also newly proposes zeroing out additional programs. The outlier to the overall trend of dramatically shrinking the housing-related programs is an increase in funding for rural rental housing assistance. Click here to view a comparative table of enacted and requested funding levels for select programs.
Cuts to funding and staff for federal agencies that administer housing programs, along with the cancellation of related contracts, would severely reduce affordable housing options and critical community services across America, with far-reaching consequences for our financial markets and the overall economy. Efforts to expand our nation's housing supply would be significantly impeded by cuts to financing for new construction and rehabilitation projects, worsening the nationwide affordable housing shortage. Many HUD, USDA, and CDFI-related programs are essential to advancing the Administration’s goals of boosting housing supply, lowering household costs, better serving rural and Tribal communities, expanding access to capital, and promoting economic development.
Highlights from agencies responsible for key programs that are important to NAAHL and its members are below.
HUD
The President’s budget proposes a 44% percent cut to HUD funding, as well as several program eliminations and consolidations and reductions in HUD staff. Throughout its explanations of changes in program structure and funding, HUD emphasizes that the agency sees a greater role for states and localities, as well as the private and nonprofit sectors, in addressing housing affordability and community development. The Budget also states that many of the issues affecting housing affordability need to be addressed at the state and local level. Proposed changes to HUD’s programs and funding include:
Consolidating existing public housing, tenant-based rental assistance, project-based rental assistance, Section 202 Housing for the Elderly, and Section 811 Housing for Persons with Disabilities programs into a single rental assistance block grant to states and significantly reducing the funding for rental assistance;
Eliminating funding for the Community Development Block Grant (CDBG) and HOME Investment Partnerships programs, deferring to states and localities to address housing and community development needs;
Eliminating funding for PRO Housing grants to communities looking to update their land use and zoning policies;
Consolidating all homelessness assistance and permanent supportive housing resources into the Emergency Solutions Grants program, with a focus on short- and medium-term assistance;
Reducing funding for Native American Housing Block Grants;
Eliminating funding for the Self-Help Homeownership Opportunity Program (SHOP) and Rural Capacity Building program and reducing funding for Section 4 Capacity Building, which would be directed to a single grantee (Habitat for Humanity);
Level funding for FHA lending and insurance, including support for Federal Financing Bank (FFB) Risk Sharing loans, and a small increase in FHA contract authority;
Eliminating funding for housing counseling;
Maintaining $26 million for Fair Housing Assistance Program (FHAP) grants to state and local fair housing enforcement agencies while eliminating funding for the Fair Housing Initiatives Program, which supports private fair housing organizations, as well as the National Fair Housing Training Academy; and
Reducing the number of funded positions at HUD (including Ginnie Mae, the HUD Office of Inspector General, and the Working Capital Fund) to 6,340, down from nearly 8,600 positions funded in FY 2025.
USDA Rural Housing Service
The President’s Budget proposes to reduce or eliminate funding for a number of Rural Housing Service lending, guarantee, and grant programs while increasing rental assistance to help preserve affordable multifamily housing in rural areas. Key changes include:
Eliminating funding for the 502 Single-Family Direct loan program;
Maintaining funding for 504 Home Repair Loans while reducing funding for 504 Home Repair Grants and eliminating funding for 533 Housing Preservation Grants;
Reducing funding for the USDA 515 Multifamily and Multifamily Preservation and Revitalization programs; and
Increasing funding for Section 521 Rental Housing Assistance while eliminating funding for the Rural Housing Voucher Program.
CDFI Fund
The President’s Budget proposes:
Eliminating funding for existing CDFI grant programs;
Creating a new Rural Financial Assistance Program, which will require that at least 60% of participating CDFIs’ loans and investments go to rural areas;
Reducing CDFI Fund staff by 12 employees (from 88 to 76) due to the reduced number of grant programs to administer and attrition, with CDFI Fund staff focused on certification, administration of New Markets Tax Credits, the CDFI Bond Guarantee Program, and the new Rural Financial Assistance Program going forward; and
Making IT investments, including in AMIS.
Other Agencies and Programs
The President’s Budget also proposes to:
Eliminate NeighborWorks America (the Neighborhood Reinvestment Corporation); and
Eliminate the U.S. Interagency Council on Homelessness.
WHAT’S NEXT
Appropriations Committees in the House and Senate have already started to hold hearings with agencies on their budget requests. The House Appropriations Committee is beginning Subcommittee markups of legislation this week as both the House and Senate work to move all 12 of their appropriations bills through their Committees and through the floor. While the President’s Budget will inform the appropriations process, Congress ultimately writes and has to pass the funding levels for federal agencies and programs.
NAAHL will be engaging with Appropriations Committee staff on key funding priorities, including the CDFI Fund and HUD and USDA programs. NAAHL encourages industry partners to engage the Appropriations Committees on the importance of HUD, USDA, and CDFI Fund funding and staff.
NAAHL will also continue to monitor the appropriations process, including forthcoming hearings (dates not yet announced) with the Secretary of Housing and Urban Development and the Secretary of Treasury. Key dates announced so far:
June 5th – House Appropriations Subcommittee Markup of FY 26 Agriculture Bill (USDA RHS)
June 11th – House Appropriations Full Committee Markup of FY 26 Agriculture Bill
June 23rd – House Appropriations Subcommittee Markup of FY 26 Financial Services and General Government (FSGG) Bill (CDFI Fund)
June 26th – House Appropriations Full Committee Markup of FY 26 Financial Services and General Government (FSGG) Bill
July 14th – House Appropriations Subcommittee Markup of FY 26 Transportation, Housing and Urban Development, and Related Agencies Bill (HUD)
July 17th – House Appropriations Full Committee Markup of FY 26 Transportation, Housing and Urban Development, and Related Agencies Bill