Congress Passes $77.3B HUD Budget for FY2026: Expanded Grants for Housing, Rental Assistance, and Homelessness

Hook

Congress has finalized a massive $77.3 billion budget for the Department of Housing and Urban Development (HUD) under the FY2026 Transportation, Housing and Urban Development (THUD) Appropriations bill—delivering billions in new federal grants for rental assistance, homelessness, and supportive housing. This bipartisan agreement, signed into law in early February 2026, represents a $7.2 billion increase over last year and directly bucks the administration’s earlier proposals for deep cuts.

The bill delivers a windfall for housing authorities and nonprofits: $2.4 billion more for tenant-based rental assistance, $366 million more for homelessness grants, and significant boosts to programs for the elderly and disabled. For advocates and grant seekers, the window to prepare applications is about to open wider than it has in years.

Context

Despite an initial budget proposal from President Trump calling for across-the-board reductions, both the House and Senate came together to reject cuts and add substantial new funds to core housing programs. The final package (H.R. 7148, see Congressional summary) passed with overwhelming support: 397-28 in the House and at least 71-29 in the Senate by mid-January 2026, following months of negotiation and a brief shutdown after the continuing resolution deadline.

The budget prioritizes stabilizing the foundations of the federal rental support system at a time when homelessness and housing precarity remain key national concerns. New funds ensure full contract renewals for both tenant- and project-based rental assistance, speed up annual grant renewals, and create opportunities for new protection vouchers—the first major expansion in years. Notably, funding for homelessness grants (such as the Continuum of Care and Emergency Solutions Grants) rises to $4.4 billion. See the National Low Income Housing Coalition's detailed analysis

At the same time, the bill marks the first year since the Fiscal Responsibility Act of 2023 without strict topline spending caps, giving appropriators greater leeway. It also introduces $3.6 billion in earmarked projects, expanding competitive opportunities for localized solutions, and mandates new HUD reporting requirements to Congress on funding use and staffing levels.

Impact

For housing authorities and nonprofits, this funding surge means substantial new and renewed grant capacity. The $2.4 billion tenant-based rental assistance increase includes $600 million in new tenant protection vouchers, while the project-based assistance boost ensures uninterrupted support for millions of households. Annual homeless assistance grants jump by more than 9%—an immediate win for organizations serving the most vulnerable, with expedited processing directives for FY2025 renewal cycles.

Smaller agencies and mission-driven nonprofits will benefit from earmarks and increased allocations for evidence-based supportive housing initiatives, especially Section 202 (elderly, now $1 billion) and Section 811 (disability, now $287 million). Organizations targeting the HIV/AIDS housing crisis gain from a $24 million expansion (now $529 million).

There are caveats: Funds for public housing operations fall by nearly $800 million, though offsetting measures and project-based boosts cushion the impact. Some competitive grant pools, such as Native Hawaiian Housing and Pathways to Removing Obstacles, see reductions. Fiscal watchdogs also point to offsetting receipts and increased Congressional oversight.

Overall, the consensus from policy experts and advocacy organizations—from the Bipartisan Policy Center to NLIHC—is clear: these gains preserve the backbone of America’s affordable housing response and unlock new opportunities for public and nonprofit grant seekers.

Action

Grant seekers should act quickly to align their projects with the newly funded priorities and prepare to compete for expanded opportunities:

1. Review HUD’s forthcoming NOFOs (Notices of Funding Opportunity) closely—especially for tenant-based, project-based, and homelessness assistance grants. Expect applications to open in spring 2026; consult HUD's grants page for updates.
2. Project readiness is key: Prepare proposals that demonstrate need, readiness to implement, partnerships, and measurable outcomes. Highlight alignment with HUD’s goals (housing stability, reductions in homelessness, serving the most vulnerable).
3. Position for earmarks/community projects: Engage with Congressional offices to learn about local priorities, and be ready to apply for competitive earmarked grant opportunities as new guidance emerges.
4. Adapt to new reporting/oversight: Stay on top of HUD’s evolving requirements, especially if you’ve previously received grants, to ensure compliance and eligibility for future funding cycles.

Outlook

Watch for HUD to release NOFOs and further implementation guidance for each program line over the next few weeks. Grant competition will be fierce, but with record appropriations and new earmark set-asides, prepared organizations stand to benefit more than at any time in recent memory. Keep an eye open for details on expedited homelessness grant timelines and potential technical assistance announcements.

For organizations seeking to navigate these expanded federal opportunities, Granted AI helps you track relevant funding notices, analyze policy shifts, and position your application for success.