HUD Releases FY26 Continuum of Care NOFO, Putting At Least 97,000 People at Risk of Losing Housing

By Alayna Calabro, NLIHC Senior Policy Analyst 

HUD issued the Fiscal Year (FY) 2026 Continuum of Care (CoC) Notice of Funding Opportunity (NOFO) on June 1. The FY26 NOFO yet again signals a significant shift in federal homelessness policy priorities by drastically reducing funding for evidence-based practices, like permanent housing, and rewarding communities that prioritize law-enforcement partnerships, mandatory services, and other “public safety” measures. The National Alliance to End Homelessness (the Alliance) estimates that at least 97,000 residents of CoC-funded permanent housing will likely lose their housing because of HUD’s approach in the NOFO. 

The CoC Program is the largest federal source of resources to address homelessness, and communities rely on the funding they receive through the CoC Program’s regular competitive process. The FY26 CoC NOFO contains numerous harmful provisions and will significantly reduce funding to CoCs through two primary avenues: 

1. Reducing funds for existing permanent housing to fund more temporary programs. In the FY26 appropriations bill, Congress required HUD to set Tier 1 renewal funding at 60% of Annual Renewal Demand (ARD) compared to 90% in 2024. While this is twice the threshold that HUD recently tried to implement, the change will force communities into difficult decisions about which proven programs can be protected. The Alliance estimates that this will put at least 97,000 residents of CoC-funded permanent housing at risk of losing their housing and reentering homelessness. Use The Alliance’s tool to see how your community might be impacted by the limitations on permanent housing outlined in the NOFO. 

2. Capping the amount of bonus funding that CoCs can receive for new projects. These funding changes will disproportionately harm communities with the greatest needs. The Alliance estimates that this will cause a group of communities with higher rates of homelessness to lose access to approximately $92 million in CoC funding. These CoCs currently represent 43% of the total population of people experiencing homelessness. 

The NOFO contains other harmful policy and programmatic changes that will negatively impact every community’s efforts to end homelessness. For example, HUD provides itself with broad authority to reject applications based on subjective, unclear, or undefined criteria. Additionally, HUD’s new national priorities focus on service participation requirements, treatment, civil commitment, and public safety. The NOFO rewards communities that prioritize voluntary and involuntary treatment, law enforcement partnerships, and other “public safety” measures. See the Alliance’s full analysis for more details. 

The policy shifts in the NOFO will likely increase the number of people experiencing homelessness as many people lose their permanent housing and others are denied access to housing that would have ended their homelessness. Federal homelessness policy should incentivize strategies that are proven to help people obtain and maintain stable housing, not shift attention away from person-centered housing outcomes. Decades of research demonstrate that people are more likely to achieve stability and improve their health outcomes when they have access to housing and voluntary services tailored to their needs. 

Read HUD’s FY26 CoC NOFO here. 

Read the Alliance’s full analysis of the NOFO here. 

Learn more about how HUD’s policy changes will put at least 97,000 people at risk of losing their housing here.