President’s budget proposes unprecedented cuts, eliminates housing programs

The Trump administration released its FY26 “skinny” budget proposal and accompanying fact sheet proposing a nearly 44% cut to the Department of Housing and Urban Development’s (HUD), eliminating many vital housing programs. Overall, the proposal cuts non-defense spending by $163 billion (16.6%), while increasing defense spending by $119 billion (13.4%).  

The proposal slashes HUD discretionary funding, targeting tenant-based rental assistance (TBRA) programs, including Housing Choice Vouchers (HCVs). It consolidates TBRA, Project-Based Rental Assistance (PBRA), Public Housing, Housing for the Elderly, and Housing for Persons with Disabilities into one State Rental Assistance Block Grant, cutting total funding from $62.6 billion in FY25 to $35.9 billion, a $26.7 billion reduction. The budget also proposes a two-year cap on rental assistance for able-bodied adults. 

TBRA supports more than 2.3 million households, an estimated 5 million people, though only one in four eligible households receives assistance due to funding restrictions. Among HCV recipients, 75% are extremely low income, 36% have a head of household who has a disability, 25% are elderly, and 39% include children.

It would further eliminate the HOME Investment Partnerships (HOME) Program, Community Development Block Grants, and PRO Housing Grants, and make significant cuts and changes to Continuum of Care grants, HOPWA, and other programs including fair housing initiatives and Native American Programs. 

Although the budget preserves and increases rental assistance grants linked to $9 billion in USDA-underwritten multifamily housing loans, it makes significant cuts to Rural Development programs including by eliminating single-family housing direct loans, self-help housing grants, and rural housing vouchers.  

The budget also calls for eliminating NeighborWorks America, a nonprofit congressionally chartered to support community development. The administration cites government downsizing and waste reduction, despite NeighborWorks leveraging its FY24 federal appropriation at a 71:1 ratio. NHC recently issued a call to action in support of its continued funding. 

Finally, the budget proposes eliminating the CDFI Fund Discretionary Awards ($291 million), targeting funds tied to racial equity, and establishing a new Rural Financial Award Program ($100 million) requiring 60% of CDFI lending and investments to rural areas. 

AHCIA reintroduced in the Senate 

Senators Todd Young (R-Ind.), Maria Cantwell (D-Wash.), Marsha Blackburn (R-Tenn.), and Ron Wyden (D-Ore.) have reintroduced the Affordable Housing Credit Improvement Act (AHCIA), legislation strongly supported by NHC that would help build 1.6 million new affordable homes over a decade. AHCIA would expand and strengthen the Low-Income Housing Tax Credit (LIHTC), the nation’s most successful affordable housing production tool that has already built or restored four million affordable housing units. The Senate version of the bill was introduced with 30 original cosponsors split evenly among Democrats and Republicans. An identical version (H.R. 2725) was reintroduced in the House several weeks earlier.  

Key provisions of AHCIA would lower the so-called “50% test” for financing, make the 2018 12.5% allocation increase permanent, mitigate NIMBY opposition by removing outdated regulations, and strengthen the program to better serve specific populations such as veterans, victims of domestic violence, formerly homeless students, Native American communities, and rural Americans. The legislation has been introduced the last five consecutive congresses and built broad bipartisan and housing stakeholder support consistently through the years.  

“The overwhelming bipartisan support for the Affordable Housing Credit Improvement Act of 2025 underscores the critical need to increase the supply of affordable rental homes,” said Affordable Housing Tax Credit Coalition Chief Executive Officer Emily Cadik.  

A letter of support from local leaders is currently being circulated for signatures by the ACTION Campaign, with a deadline of May 6 for mayors, county executives, county board chairs, and other local elected officials to encourage Congress to pass the AHCIA. 

“Housing inflation is up 4% over the past year nationally and 4.5% in the Pacific Northwest – and that was before homebuilders reported an additional 5.5% increase in costs due to tariffs this year,” said Sen. Cantwell. “We need to do more to lower housing costs for everyone. Expanding and improving the Low-Income Housing Tax Credit will do just that by making it more affordable to build homes and lower rents.”

CFPB mass firings paused, GAO to investigate 

The U.S. Government Accountability Office (GAO) has agreed to investigate actions being taken to shut down the Consumer Financial Protection Bureau (CFPB), following a request from more than 40 Democratic Senators. The request cites the flurry of terminations that has reduced the agency’s workforce from 1,700 to just 200 employees, who are now responsible for running all operations. 

“On April 17, you tried to fire nearly all of the agency’s remaining 1,700 employees—the staff responsible for fulfilling the CFPB’s mission and statutory requirements to prevent Americans from getting scammed by big banks and giant corporations,” the letter reads. “Your hasty and unjustified mass firings are an illegal shutdown of the CFPB that will leave it unable to conduct agency actions that are required by law.” It goes on to request a detailed account of how each of the CFPB’s 80 statutory obligations will be fulfilled, including how many employees were assigned to each obligation before and after the rushed reduction.  

A U.S. appeals court further restored a temporary block on mass layoffs at the CFPB, stating it was necessary in order to preserve the legal protections of employees while the case is open.  

FHA to again limit post-foreclosure sales to 15 days on REO properties 

The Federal Housing Administration (FHA) is rescinding a Biden-era policy to boost nonprofit and government participation in post-foreclosure property sales. In a 2022 Mortgagee Letter (ML), FHA expanded the exclusive listing period from 15 to 30 days for owner-occupant buyers, HUD-approved nonprofits, government entities for both HUD real estate-owned properties, and properties in the FHA's Claims Without Conveyance of Title process (CWCOT). The 2022 ML noted that the properties “typically only require cosmetic repairs or non-structural repairs up to $10,000, which makes them more desirable for Owner-Occupants, Governmental Entities, and HUD-approved Nonprofits” and sought to increase housing available to first-time and low- and moderate-income buyers.   

The new ML 2025-13 cites dissatisfactory and insubstantial results from the expanded listing period as the principal reason for the rescission. 

“HUD data over the past several years show, at best, mixed results from these efforts,” the letter reads. “During the new CWCOT exclusive listing period, very few properties have sold to owner-occupant buyers and even fewer were purchased by HUD-approved nonprofits and government entities.” 

The FHA will also update the Single Family Housing Policy Handbook 4000.1 to reflect these changes.