Congress Expected to Vote on Final FY26 HUD Funding Bill After Thanksgiving – Take Action Today to Protect Vital Housing Resources, Including Assistance for over 170,000 People Formerly Experiencing Homelessness
Nov 24, 2025
By Kim Johnson, NLIHC Senior Director of Policy
Senate Appropriations Committee Chair Susan Collins (R-ME), Vice Chair Patty Murray (D-WA), House Appropriations Committee Chair Tom Cole (R-OK), and Ranking Member Rosa DeLauro (D-CT) met last week to discuss a potential spending package that would include five of the remaining nine fiscal year (FY) 2026 appropriations bills. The five-bill package would likely include the Transportation, Housing and Urban Development (THUD) bill that funds HUD’s vital affordable housing, homelessness, and community development programs. Lawmakers have until January 30 to pass the nine remaining spending bills, or another continuing resolution (CR) to temporarily extend federal funding and avert another government shutdown.
The THUD bill is the best opportunity advocates will have this year to protect federal investments in rental assistance and homelessness services, including stalling the harmful changes made to HUD’s Continuum of Care (CoC) funding process that would upend decades of best practices, and leave over 170,000 people who had previously been experiencing homelessness at risk of losing their housing.
Final HUD Spending Bill Must Protect Funds for Permanent Housing and Rental Assistance
The Trump administration released on November 13 a FY 2025 CoC Notice of Funding Opportunity (NOFO), making drastic changes to how the federal government funds homelessness assistance programs. The NOFO:
- Makes significant changes to which projects get funding and how much communities can spend on permanent housing, putting assistance at risk for over 170,000 people who had previously been experiencing homelessness. Typically, about 87% of CoC funding goes towards permanent housing projects, including Permanent Supportive Housing (PSH) that provides people experiencing homelessness, including those with severe mental illness or substance use disorder, with housing and voluntary, person-centered, wrap-around services that help ensure long-term housing stability. Rapid Re-Housing (RRH), another type of permanent housing project, provides short-term rental assistance and stability services to help people at risk of or who have recently fallen into homelessness quickly move into stable housing. PSH and RRH are proven to help end homelessness, including families, veterans, people with disabilities, and people experiencing chronic homelessness. Rather than continuing these established best practices, the new NOFO:
Caps how much funding communities can spend on permanent housing at just 30%. With 87% of CoC funding currently going towards permanent housing, this cap will require communities to make major changes to the programs they offer, including shifting funding from PSH and RRH to transitional housing, emergency shelter, and street outreach, which are less effective at addressing and ending homelessness.
Changes CoC funding to prioritize competitive “Tier 2” projects over protected “Tier 1” projects. Tier 1 projects, protected by HUD to ensure the continued operation of CoCs’ most important programs, received 90% of funding in the previous year’s NOFO. The new NOFO reduces Tier 1 funding to just 30% and increases funding for Tier 2 projects from 10% to 70%. Funding for Tier 2 projects is awarded on a competitive basis.
Penalizes organizations that do not align with the administration’s priorities, including looking into past projects. Applicants for either Tier 1 or Tier 2 project funding can be rejected if they currently use or previously used “racial preferences,” utilized harm reduction measures like safe injection sites, or defined “sex” as “other than binary.” Projects serving youth experiencing homelessness, who are more likely to identify as trans or non-binary, may be especially impacted by this provision. In addition, projects that require individuals to participate in services, that are in places with laws that arrest, ticket, or fine people experiencing homelessness, or that “promote self-sufficiency” will be prioritized for funding under the new NOFO.
Is extremely late in the CoC funding cycle, which will cause major funding delays. The application for the FY25 NOFO is due January 14, and funding awards will not be announced until May at the earliest. The National Alliance to End Homelessness (the Alliance) warns that approximately one-third of all current CoC funding awards expire between January and June; even if their funding contracts are ultimately selected for renewal, these programs will run out of money before they receive new funding, resulting in unpaid rental assistance, a significant decrease in services, and more people experiencing homelessness.
Read the Alliance’s full analysis of the NOFO here, and find more resources here.
NLIHC and the Alliance are calling on Congress to hold HUD accountable to its promised two-year NOFO cycle, and to include language in any final THUD bill that would extend funding for previously awarded projects for another 12 months.
In addition, Congress must provide sufficient funding in any final FY26 THUD bill to renew all existing Housing Choice Vouchers (HCVs) and Emergency Housing Vouchers (EHVs). Without sufficient funding, vouchers will be lost through attrition – when a household no longer needs its voucher, it cannot be reissued to a new family because it is no longer attached to funding. When renewal funding is insufficient or when funding is cut – households that rely on a voucher to keep a roof over their heads actively lose their rental assistance, putting them at risk for housing instability, eviction, and in worst cases, homelessness.
At current funding levels, over 2.4 million households receive rental assistance, accounting for just one in four households who qualify. Under the House’s FY26 spending bill, an estimated 181,900 fewer households would be served; in the Senate, 107,800 fewer households would receive rental assistance. The loss of these vouchers would disproportionately affect older adults, people with disabilities, and families with children.
Take Action
Use NLIHC’s toolkits and resources to take action on FY26 funding, including by:
- Using NLIHC’s advocacy toolkit, “Opposing Cuts to Federal Investments in Affordable Housing,” to call on Congress to protect and expand affordable housing and homelessness resources, including NLIHC’s priorities:
Full funding to renew all existing tenant-based voucher contracts, to ensure the people and families who rely on an HCV or EHV to keep a roof over their heads do not lose their assistance. Check out the “EHV Funding Cliff Mobilization Toolkit” for more information, including talking points and resources.
$4.922 billion for HUD’s Homeless Assistance Grants (HAG) program, and for HUD to stick to its commitment to a two-year Notice of Funding Opportunity (NOFO) for the Continuum of Care Program.
$5.7 billion for public housing operations, and at least $5 billion to address public housing capital needs.
$15 million for the Eviction Protection Grant Program (EPGP), as provided in the Senate’s spending bill.
At least $1.3 billion for HUD’s Indian Housing Block Grant (IHBG) program and $150 million for IHBG-Competitive funds, targeted to Tribes with the greatest needs.
The toolkit includes talking points, advocacy materials, engagement ideas, and more resources for advocates to weigh-in with their members of Congress on the importance of these vital resources!
- Emailing or calling members’ offices to tell them about the importance of affordable housing, homelessness, and community development resources to you, your family, your community, or your work. You can use NLIHC’s Take Action page to look up your member offices or call/send an email directly!
Sharing stories of those directly impacted by homelessness and housing instability. Storytelling adds emotional weight to your message and can help lawmakers see how their policy decisions impact actual people. Learn about how to tell compelling stories with this resource.
National, state, local, Tribal, and territorial organizations can also join over 2,800 organizations on CHCDF’s national letter calling on Congress to support the highest level of funding possible for affordable housing, homelessness, and community development resources in FY26.
Visit NLIHC’s Advocacy Hub for more information and resources that can help you take action and help protect the affordable housing programs people rely on.