HUD Policy Changes Threaten Efforts to End Homelessness: At Least 97,000 People Could Lose Housing

On June 1, 2026, the U.S. Department of Housing and Urban Development (HUD) acted to reduce what the Alliance estimates to be at least $1.23 Billion in available funding for housing formerly homeless people, many of whom are families with children, have health conditions, disabilities, or are older adults. Simultaneously, the agency announced a resource rebalancing that would disadvantage some major cities and other communities with high per capita rates of homelessness. The number of people experiencing homelessness is likely to increase as many people lose their housing and future housing opportunities decrease. 

HUD announced these policy shifts by issuing its Notice of Funding Opportunity (NOFO) for the FY2026 Continuum of Care (CoC) Program Competition. The CoC Program is the largest federal source of resources to address homelessness. Communities across the country rely on the funding they receive through the CoC Program’s regular competitive process. While the NOFO contains numerous harmful components, it drastically reduces funding to CoCs through two primary mechanisms: 

1. Significantly reducing funds for existing permanent housing to fund more temporary programs. The Alliance estimates this change will put at least  97,000 residents of CoC-funded permanent housing at risk of losing their housing. Importantly, this is a low-end estimate. The immediate impacts will be compounded over time as permanent housing programs are defunded, and many more people are denied housing opportunities that would have ended their homelessness.  
2. Capping the amount of “bonus funding” that CoCs can receive for new projects. The Alliance estimates that this will cause a subset of communities with higher rates of homelessness to lose access to approximately $92,864,400. Though small in number, these CoCs currently represent 322,102 people experiencing homelessness or 43% of the total unhoused population. 

The precise impact of these changes depends on how communities respond to these policy changes, including how they decide to prioritize their existing grants. The following state and local analysis can help providers, CoCs, local leaders, and the media understand likely outcomes of these changes. Whenever possible, CoCs are encouraged to do their own analysis using local data on the number of people being housed and the costs of housing. Local data is likely more up-to-date, and calculations can be tailored to better reflect local planning and decision-making in response to this NOFO.

Limitations on Permanent Housing Funding Put People in Nearly Every Community At Risk of Reentering Homelessness

The Selection Process outlined in the NOFO effectively means that CoCs will likely only be able to renew up to 60 percent of their existing grants to permanent housing providers. In the coming weeks, CoCs will need to make tough decisions about how to prioritize available funds.

On the below map, states highlighted in the darker colors are more heavily reliant on federal CoC program funding to support their permanent housing portfolio. They are likely to feel more severe impacts from potential cuts. Hover over the map to see the projected loss of funding for permanent housing and the number of people in these programs who could lose their housing due to HUD’s outlined funding award process. Search for your CoC in the table below the map to see how these changes might impact your community—including how many peoples’ homes, and how much funding, is at stake.  

Caps on “Bonus” Funding Will Lead to Millions in Losses in Key Jurisdictions

New criteria would also cap the amount that jurisdictions could receive for a vital pot of money (labeled “Bonus” funds) that is annually used to expand and evolve the work of Continuums of Care. For some communities, the cap would be much lower than the amounts they have typically received over the years, causing them to lose much of their expected funding for new bonus projects. 

These changes will not have an equal impact. They will take funding away from CoCs with the largest share of people experiencing homelessness. This would be a major setback for homeless services workers throughout the country who collaborate to end homelessness by sharing information about best practices and learning from each other’s progress. Additionally, funding shortfalls in these places impact more people experiencing homelessness. When communities with the biggest challenges lose funds, it is more likely that the nationwide homeless count (a reflection of their collective efforts) will go up.  

What will cause these losses? Under the new rules, a subset of CoCs are eligible for a maximum of $5,000,000. This estimate assumes that every CoC receives the maximum $5,000,000 in bonus funding, which is not guaranteed. As a result, the funds lost could be even larger. It is not at all clear how homeless response systems would replace $93 million or more in anticipated funding. 

Caps on Bonus Funding Hit Communities with the Greatest Needs the Hardest

It is important to note that every community needs more funding to house more people. No community has enough resources to fully meet their housing and services needs. 

However, these funding changes will hurt communities with the greatest needs the most. The average rate of homelessness in communities at risk of becoming ineligible for larger amounts of bonus funding is nearly double the national average (44 people per 10,000 residents versus 22 people per 10,000 residents). Based on the cost of an average Rapid Re-Housing bed, these communities would lose access to enough bonus funding for at least 11,000 new beds.   

Even more discouraging, many of these communities were making progress toward reducing homelessness or responding to large increases in the number of people in need of assistance before HUD announced this policy.

HUD may be preparing to shift “bonus” funding from major cities and other CoCs with the largest concentrations of homelessness to different CoCs with lower concentrations of homelessness. Unfortunately, even the communities benefiting from new funds will still struggle. Like all other communities, they will be capped on how much they can spend on existing permanent housing. They will likely have people lose permanent housing—though, ironically, new bonus funds may help them put those same people in temporary accommodations. Since people in temporary accommodations (transitional housing, shelters) are still homeless, their overall progress toward ending homelessness will be hindered in ways similar to all the other communities. If CoCs make the decision to split into multiple CoCs, the estimated losses could be even greater than what is stated above. Communities that split and form a new CoC would only be eligible for a maximum of $3,000,000 in bonus funding, rather than $5,000,000.

Put simply, this approach will not advance nationwide progress on ending homelessness. Nearly every state and CoC will lose out – albeit to different degrees. 

No Good Outcome

Efforts to end homelessness will suffer because of this NOFO. Depending on how CoCs prioritize their existing housing projects and apply for new resources, the NOFO’s impacts will vary. These estimates focus on the least bad likely scenario but the impacts could be far worse. By dramatically shifting its policies in this way, HUD will hurt states, communities and people experiencing homelessness, putting any hope of ending homelessness at risk. 

Data Notes 

True impacts will depend on how individual projects and Continuums of Care decide to respond to the NOFO. These calculations assume that the only path to renewing a permanent housing project is prioritizing it in Tier 1 (which is based on a CoC’s Annual Renewal Demand (ARD)); and thus treats the cap on Tier 1 funding at 60% of a CoC’s ARD as effectively a 60% cap on renewal permanent housing funding. Further adjustments are made to assume that each CoC will prioritize at least some of their HMIS or Coordinated Entry funding in Tier 1 (further decreasing the amount available for permanent housing), and account for local housing costs. Although some funding may be available to renew projects prioritized in Tier 2, this is not guaranteed. Even if it is possible, it is not likely that this would decrease the projected estimates as they are conservative. Because HUD has not released the actual FY26 ARD amounts, this analysis largely relied on FY25 Award Announcements with supplemental information from other sources like the 2025 Housing Inventory Count. It includes a projection of first-time YHDP renewal awards that might be included in FY26 ARD but does not account for other similar scenarios like first-time renewals of projects funded through HUD’s Special NOFO to Address Rural and Unsheltered Homelessness. This likely causes an underestimate of renewal projects by at least $50,000,000. CoCs are strongly encouraged to perform similar analyses using their own data and set of assumptions. 

The CoC Bonus calculations use FY24-25 ARDs as HUD has not released FY26 Annual Renewal Demand data. Estimates using FY26 ARDs may be even larger. The NOFO states that CoCs may use up to 15 percent of their Final Pro Rata Need (FPRN) to create one or more new projects. HUD created new minimum and maximum Bonus amounts depending on whether CoCs split, merge, are new Tribal CoCs, or remain unchanged. Consequently, individual CoC changes will determine the exact range of funding they are eligible for—and how the national impacts add up.