The FY2027 Budget Would Zero Out Every Major Federal Housing Grant. Here's What Comes Next.

A city housing director in Toledo, Ohio, used Community Development Block Grant funds last year to demolish 47 abandoned structures, repair 182 owner-occupied homes, and install ADA-compliant sidewalks in three low-income neighborhoods. A Community Development Corporation in Raleigh, North Carolina, used HOME Investment Partnership dollars to break ground on 24 units of permanent affordable housing for families earning below 60 percent of the area median income. A continuum of care collaborative in Denver used federal Continuum of Care funding to house 3,400 people experiencing chronic homelessness — the largest reduction in street homelessness the city has achieved in a decade.

Under the FY2027 budget released on April 3, every one of those funding streams would cease to exist.

The Trump administration's budget request proposes a $10.7 billion cut to the Department of Housing and Urban Development — a 12.7 percent reduction from FY2026 enacted levels — achieved primarily by eliminating the programs that have formed the foundation of federal housing and community development policy for decades. This is not a trim or a restructuring. It is a proposed erasure of the federal government's role in affordable housing production, neighborhood revitalization, and homelessness prevention.

The Programs Marked for Elimination

The scope of what the budget proposes to zero out is remarkable. These are not fringe programs or pilot projects. They are the core of federal housing and community development funding.

Community Development Block Grants ($3.3 billion → $0). Created in 1974, CDBG is the single most versatile federal housing grant. It flows directly to over 1,250 "entitlement" cities and counties on a formula basis — no competitive application required — and supports everything from infrastructure repair to small business lending to code enforcement. States receive the remaining 30 percent of funds for non-entitlement communities. A 2024 HUD report found that CDBG-funded activities reached 8.7 million people annually. The president has proposed eliminating it six times. Congress has ignored the request every time.

HOME Investment Partnerships ($1.25 billion → $0). HOME is the primary federal tool for constructing and rehabilitating affordable housing. It requires a 25 percent local match, which means every federal dollar leverages additional investment. Eliminating HOME removes the capital subsidy that CDCs, housing authorities, and developers use to make affordable projects financially viable. Without it, many developments that are currently in the pipeline — projects with committed Low-Income Housing Tax Credit equity waiting on HOME gap financing — may never break ground.

Choice Neighborhoods Initiative ($0). The successor to HOPE VI, Choice Neighborhoods funds comprehensive neighborhood transformation centered on distressed public housing. Eliminating it removes the only federal mechanism for large-scale mixed-income redevelopment of obsolete public housing stock.

Housing Opportunities for Persons with AIDS ($0). HOPWA is the only federal program dedicated to housing assistance for people living with HIV/AIDS. Despite serving over 47,000 households annually, it would be eliminated entirely.

Continuum of Care ($0 as a standalone program). The administration proposes eliminating the Continuum of Care program — the primary federal mechanism for permanent supportive housing and rapid rehousing — and replacing it with $4 billion in Emergency Solutions Grants. As Granted previously reported, courts in Rhode Island and the First Circuit have already blocked the administration's attempt to restructure CoC grants, ruling that HUD violated the Administrative Procedure Act by imposing sweeping policy changes "days before application deadlines." The FY2027 proposal attempts to accomplish through appropriations what courts prevented through regulation.

Self-sufficiency programs ($0). The Family Self-Sufficiency Program, Jobs-Plus, and the Resident Opportunity and Self-Sufficiency (ROSS) program would all be eliminated. These are the programs designed to help assisted households build savings, gain employment, and eventually leave subsidized housing — the exact outcomes the administration claims to want.

Work Requirements and Time Limits: The Policy Shift Beneath the Cuts

The budget doesn't just eliminate programs. It reshapes who qualifies for the programs that remain.

For the first time in federal housing policy, the FY2027 proposal introduces work requirements for assisted households. Adults aged 18 to 62 receiving Housing Choice Vouchers, project-based rental assistance, or public housing would be required to work, participate in training, or perform community service as a condition of continued assistance. Exemptions exist for the elderly, disabled, and caregivers of dependents — but the administrative burden of verifying compliance would fall on public housing agencies that are already understaffed and underfunded.

More consequential is the proposed 60-month time limit on receiving assistance. Under current law, there is no durational cap on housing assistance. The FY2027 budget would impose a five-year clock on eligible households — after which assistance ends regardless of a family's circumstances. For families in high-cost housing markets where affordable alternatives simply do not exist, a time limit creates a cliff that no amount of self-sufficiency programming can address, particularly when those self-sufficiency programs are simultaneously being eliminated.

The proposal also freezes voucher issuance. Public Housing Agencies would be prohibited from issuing any new vouchers or otherwise assisting new families, with narrow exceptions for HUD-VASH (veterans), Family Unification, Foster Youth to Independence, and Rental Assistance Demonstration project-based conversions. In a market where HUD estimated a shortage of 7.3 million affordable rental units in its most recent worst-case housing needs report, halting new voucher issuance means the waitlist — already averaging two to three years in most jurisdictions — will grow indefinitely.

What $4 Billion in Emergency Solutions Grants Actually Buys

The administration frames the $4 billion Emergency Solutions Grant allocation as a sufficient replacement for the programs it eliminates. It is not.

Emergency Solutions Grants fund emergency shelters, street outreach, and short-term rapid rehousing. They do not fund the permanent supportive housing that evidence consistently shows is the most effective intervention for chronically homeless individuals — a population that disproportionately includes people with severe mental illness, substance use disorders, and physical disabilities for whom short-term shelter is medically and practically inadequate.

The shift from CoC to ESG represents an ideological transformation: from a housing-first model that prioritizes getting people into permanent housing as quickly as possible, to a shelter-and-services model that conditions permanent housing on compliance with treatment, sobriety, or employment requirements. The evidence base overwhelmingly favors housing first. A 2020 meta-analysis published in The Lancet found that housing-first programs reduced homelessness by 88 percent compared to 47 percent for treatment-first models. The National Academies of Sciences, Engineering, and Medicine issued a consensus report in 2018 concluding that permanent supportive housing reduces chronic homelessness, decreases emergency department visits, and lowers criminal justice involvement.

The FY2027 budget proposes to discard two decades of evidence and decades of bipartisan policy in favor of an approach that the research record consistently shows produces worse outcomes for the most vulnerable populations.

Congressional Context: Why This Budget Matters Even If It Never Passes

The president's budget is a policy document, not law. Congress writes appropriations bills, and bipartisan majorities have rejected CDBG elimination proposals every year since 2017. The National Association of Housing and Redevelopment Officials emphasizes that "the President's budget is a policy proposal — not law."

But the budget matters for three reasons even if Congress rejects the headline eliminations:

First, it sets the negotiating anchor. Congressional appropriators begin markups from the president's request. Even modest compromises — a 20 percent cut to CDBG instead of elimination, a $500 million reduction to HOME instead of zeroing it — would represent significant real-world funding losses.

Second, the work requirements and time limits may be pursued independently. The administration could implement work requirements through regulatory action under existing statutory authority, as HUD attempted in its first term. Congressional Republicans have expressed broad support for work requirements in housing programs. Even if CDBG and HOME survive, work requirements could be attached as conditions to existing assistance.

Third, the executive branch has demonstrated willingness to withhold appropriated funds regardless of congressional intent. As Granted has reported, a growing gap has emerged between what Congress appropriates and what agencies actually disburse. NIH, NASA, and other agencies have billions in unspent appropriations. HUD is no exception. Whether through slow-walking grant awards, restructuring competitive scoring, or interpreting existing statutory authority in restrictive new ways, the administration has tools to reduce effective funding levels without congressional permission.

What Housing Organizations Should Do Now

Document local impact in dollar terms. NACo's analysis recommends that localities quantify exactly what CDBG, HOME, and CoC funding accomplishes: number of units built, people housed, jobs created, infrastructure repaired. These figures will be essential during congressional markup season.

Engage your congressional delegation before markup. The House and Senate Appropriations subcommittees that draft HUD funding bills will begin work in the coming weeks. Personal constituent meetings — not form letters — are what move members.

Assess pipeline exposure. If your organization has projects in the pipeline that depend on HOME gap financing or CDBG-funded infrastructure, begin modeling scenarios where that federal contribution is reduced by 25 to 50 percent. Identify alternative gap sources: state housing trust funds, Low-Income Housing Tax Credits, tax-exempt bonds, philanthropic capital.

Prepare for work requirement implementation. Regardless of what happens in appropriations, the regulatory push for work requirements in housing programs is likely to continue. Organizations that operate Family Self-Sufficiency programs or employment-focused case management should position these existing capabilities as assets, not liabilities, in grant applications and advocacy.

Build coalitions across sectors. The FY2027 budget proposes eliminating housing grants alongside deep cuts to public health programs, $22 billion in science agency reductions, and the elimination of the Community Services Block Grant. Housing organizations that connect their advocacy to public health, workforce, and economic development constituencies will have more influence than those fighting alone.

The budget's chances of passing as written are near zero. But the strategy it reveals — a systematic effort to withdraw the federal government from affordable housing production, shift responsibility to states, and condition remaining assistance on behavioral compliance — is not limited to a single fiscal year. For organizations that build, manage, or advocate for affordable housing, the response has to be equally long-term. Platforms like Granted can help identify alternative funding sources and build stronger proposals for the programs that survive — because the competition for what remains will be fiercer than ever.