The President’s FY2026 Budget Proposal: Potential Impacts on Efforts to Prevent and End Homelessness

Each year, the President releases a budget proposal for the following fiscal year. These budget proposals, which outline suggested funding for discretionary programs, reflect the values and priorities of the administration in office. Based on the FY2026 budget proposal released by the White House in May 2025, it is clear that the Trump Administration seeks to abdicate the federal government’s responsibility for ensuring a strong social safety net. This budget will not ensure that the most vulnerable Americans have access to the most basic things for survival, including housing. However, Congress — not the President — is responsible for deciding how federal funding is appropriated. Congress has the power to ensure that communities have the funding they need to address the growing homelessness and affordable housing crisis.

The proposed policy changes, funding cuts, and total elimination of critical programs for low-income and vulnerable Americans, if enacted, would only worsen homelessness and exacerbate already-overwhelmed homelessness response systems. These actions would worsen existing disparities for some groups more impacted by homelessness, including older adults, people with disabilities, LGBTQ+ youth, people living in rural communities, and specific racial and ethnic groups.

How the Budget Threatens Efforts to End Homelessness

When the White House released President Trump’s “skinny budget” in May 2025, the Alliance released a statement in response urging Congress to reject the concerning changes in the FY2026 budget proposal.

Now that the administration has released more information (see links below) on the FY2026 budget proposal, the Alliance has analyzed the most catastrophic proposals that would impede efforts to prevent and end homelessness in the United States. These include major changes to Homeless Assistance Grants, but also to many of the social safety net resources that millions of Americans rely on.

U.S. Department of Housing and Urban Development (HUD) 

Homeless Assistance Grants

• The President’s budget proposal seeks to consolidate the Continuum of Care (CoC) Program and the Housing Opportunities for Persons with AIDS (HOPWA) program into the existing Emergency Solutions Grants (ESG) Program.
• Through this problematic consolidation, the administration seeks to zero out the HOPWA program ($505 million) and reduce the total amount available for Homeless Assistance Grants by $27 million.
• By consolidating all special needs funding into the ESG Program, activities and functions funded only through the CoC Program would no longer be available. This would include:
  • Permanent Supportive Housing
  • CoC Planning funds, which help CoCs carry out requirements like conducting Point-in-Time Counts and monitoring funding recipients/subrecipients
  • Dedicated Coordinated Entry grants 
  • Dedicated grants for Homeless Management Information Systems (HMIS) 
  • Continued funding eligibility for Youth Homelessness Demonstration Program (YHDP) projects in 120 communities
  • Community Compass Technical Assistance funding (typically allocated out of the amount available for the CoC Program in a given year) 
• The budget proposal would also eliminate funding within HUD for the National Homelessness Data Analysis Project (NHDAP), which funds activities associated with preparing the Annual Homelessness Assessment Report to Congress and reporting on system-level performance.
• The CoC Program requires a 25 percent match of awarded grant funds from cash or in-kind resources. This is significantly different from the ESG Program requirement of a dollar-for-dollar match and would be exceptionally challenging to implement.

The impact of these sweeping changes would be devastating: 

• The residents of roughly 170,000 units of Permanent Supportive Housing, funded by the CoC Program, would be at risk of returning to homelessness. All of these residents are people with a disability, many who were chronically homeless at the time they were housed.
• Although Rapid Re-Housing is eligible in the ESG Program, there is no guarantee that every current Rapid Re-Housing program participant could transfer their housing assistance to another program: programs funded through the CoC Program have different geographic coverage, grantees, and grant terms than the ESG Program. This would jeopardize housing assistance for nearly 42,000 people. 
• The very infrastructure for homelessness response efforts — the Continuum of Care — would be dismantled through the loss of dedicated funding to carry out its responsibilities. This would erode the mechanisms that currently exist for transparency, accountability, and cross-system collaboration.
• By eliminating the CoC Program, the President’s budget proposal would eliminate the competitive process in place for the federal government’s largest investment in homeless assistance funding, removing local control and decision-making. The proposed budget will make sweeping changes to how funds are allocated to states and local communities across the country, and annual renewal demand and CoC geographic designations will not be considered in the formula for ESG.
• The discontinuation of funding for McKinney-Vento technical assistance will leave CoCs and funding recipients without support to mitigate changes while working to build capacity and ensure compliance.

Other HUD Programs

The proposed FY26 budget significantly attacks other vital HUD programs. Overall, the President seeks to cut a historic 44% of funding available for HUD’s vital affordable housing and community development programs, cutting off assistance from housing insecure households and denying help to many more. This action would place millions more households at risk of homelessness. More specifically, the budget seeks to:

• Eliminate most federal rental assistance programs administered by HUD and replace them with a new State Rental Assistance Program at a total cost of $36.2 billion. This would represent a $26.72 billion reduction in funding across these sources, a 57.5% decrease.
  
  This means eliminating Tenant-Based Rental Assistance, Public Housing, Project-Based Rental Assistance, Section 811, and Section 202.
  
  Together, these five HUD programs help more than 4.4 million households with the lowest incomes — including families, people with disabilities, older adults, workers, caregivers, and people who formerly experienced homelessness.
• Reduce funding for fair housing initiatives by more than half — down to $26 million. 
• Eliminate funding for HUD’s Community Development Block Grant (CDBG) program and the HOME Investment Partnership (HOME) program, which provide critical funding for community and affordable housing development. The proposal does not make additional funding available for long-term recovery funding for disaster-impacted areas through HUD’s CDBG-Disaster Recovery (CDBG-DR) program.
• Eliminate HUD’s rental assistance funding for HUD-VA Supportive Housing (HUD-VASH) vouchers by seemingly moving the funding and responsibility for administering this rental assistance to the U.S. Department of Veterans Affairs (VA).
• Disinvest in research and evidence by reducing funding for the Office of Policy Development and Research (PD&R) by 22%. The budget proposal would also impose a match requirement of at least 50% toward the cost of any project for organizations, agencies, institutions, or any other research partners entering a cooperative agreement. This change, forcing institutions to fund at least 50% of their own research, would limit opportunities for entities unable to provide that match and would advantage wealthy institutions. Requiring this match would reduce the number of researchers able to contribute to federal housing research and policy. 

Threats to Other Federal Programs Impacting Homelessness

Outside of HUD, 18 other federal agencies and offices offer targeted and mainstream programs that can help prevent and end homelessness. Yet, across other agencies, the proposed budget seeks to impose reductions in federal spending on the backs of the most vulnerable. Other significant changes proposed in the budget include:

U.S. Department of Health and Human Services (HHS)

• Zeroing out the Low-Income Home Energy Assistance Program (LIHEAP), which supports utility-burdened households with energy costs and helps them stay in their homes. 
• Cutting and consolidating crucial programs focused on meeting unmet mental health needs and addressing substance use disorders. For example, instead of building on the 27% decrease in overdose deaths from 2023 to 2024, this budget proposal instead seeks to eliminate 20% of funding for the office responsible for this progress. With this level of reduced funding, a rise in overdose deaths may be possible.

U.S. Department of Education (ED) 

• Folding Department of Education programs into a block grant, threatening dedicated funding to solve homelessness amongst children and youth. The budget proposes to consolidate 18 different Education programs into one formula grant disbursed to states, which supports educational stability for youth experiencing homelessness. Losing this dedicated funding means that funding for a community’s homeless children and youth would be dependent on how states decide to allocate already-scarce resources. 

U.S. Department of Veterans Affairs (VA)

• Creating uncertainty in program funding for veterans experiencing homelessness. The President’s budget continues to identify veteran homelessness as a priority and provides increased funding for the VA. However, it is evident that a significant portion of this funding is to create a new rental assistance voucher program for homeless veterans, called Bridging Rental Assistance for Veteran Empowerment (BRAVE), funded at $1.1 billion. The budget proposal does not specifically address current VA homeless programs, including HUD-VASH and Supportive Services for Veteran Families (SSVF), which have been instrumental in the nearly 50% reduction in veteran homelessness since 2010.

United States Interagency Council on Homelessness (USICH) 

• Formally eliminates the USICH. The budget proposal allocates $250,000 for the effective close out of USICH, the agency that has led coordination of federal response to homelessness for decades.