This is part 2 of HDC’s deep dive into expected federal impacts on affordable housing from the “One Big Beautiful Bill Act.” You can read part 1 here.

With the signing of the reconciliation bill on July 4^th (“One Big Beautiful Bill Act”), Congress has turned its attention to funding the federal government in the coming fiscal year through Appropriations. This budget must be negotiated and passed by October 1, 2025. Otherwise, Congress will need to pass a short-term funding extension called a continuing resolution (CR) to avoid a partial government shutdown. In the current environment, this process poses risks to federal programs that have traditionally supported affordable housing and low-income families.  

The White House released the President’s preferred appropriations budget in Spring 2025 with historically deep cuts to Department of Housing and Urban Development (HUD) affordable housing and homelessness programs. The House proposal, which was passed along party lines on July 14^th, proposes substantially less cuts than the President’s version yet would only “provide $67.8 billion for HUD’s vital affordable housing, homelessness, and community development programs in FY26—a decrease of $939 million from FY25” (NLIHA). In other words, the House version would not maintain existing program capacity. The Senate version, which was released on July 24^th, rejects most of the significant cuts in the President’s version and actually increases overall allocations by $3.3 billion (NLIHA or a release from Senator Murray). Check out this comparison chart to understand the budget versions that will now be negotiated leading up to the October 1^st deadline. Depending on the final version, the appropriations budget process in fall 2025 may cause massive funding losses for HUD and other housing programs including: 

• HUD staffing reductions, which may slow HUD’s ability to do critical work.  
• Large reduction in housing capital funds. For example, the President’s budget proposes cutting Community Development Block grants that support community development and housing. Both the President and House budgets propose eliminating all HOME grants, while the Senate version does not. If passed, these reductions will result in reduced creation and preservation of low-income housing.  
• Reduced operational funding for existing affordable housing developments and homelessness responses. The president’s budget proposal would strip funding for HUD homelessness programs by 12%. It also proposes consolidating the Continuum of Care (CoC) Program—along with Housing Opportunities for Persons with AIDS (HOPWA)—into the Emergency Solutions Grants (ESG) program. The CoC Program represents the federal government’s key vehicle for distributing homelessness funds. The proposed consolidation would effectively eliminate funding for critical activities, including Permanent Supportive Housing, Coordinated Entry, and overall Continuum of Care planning (source). While the other versions reject this consolidation, there is a  major risk for supportive housing and emergency shelter residents and providers. 
  • A comparison of the homelessness program proposals for the House and Senate versions is here.  
• Reductions to housing vouchers that help low-income tenants afford housing and stay housed. The Trump Administration’s FY26 budget request proposes combining the Housing Choice Voucher program, Public Housing, Project-Based Rental Assistance, and the Section 811 and Section 202 programs into the State Rental Assistance Block Grant program, while making substantial cuts. The President’s proposal would also impose restrictions on Housing Choice Vouchers, such as work requirements and time limits on voucher usage. The House version reduces funding for tenant-based rental assistance, while the Senate version increases this funding overall. Neither the Senate nor House bill includes the arbitrary two-year limit on receiving HUD rental or homelessness assistance. A reduction in access to housing vouchers would hurt families in need. Since future expected rents are leveraged to fund projects, less future projected rent for low-income projects may also result in less future housing creation. 
• Fair Housing & Equal Opportunity programs would be drastically cut under the President and House versions, but are maintained in the Senate version. For example, the President and House budgets propose eliminating the local Fair Housing Initiatives Program (FHIP), which was created under the Reagan administration and supports cost-efficient, local nonprofits that ensure access to housing opportunities free of discrimination while keeping Fair Housing funding static for other functions. FHIP accounted for 75% of housing discrimination complaints (NFH), so its elimination could lead to an increase of everyday people being denied access to housing opportunities or losing access to housing based on discrimination.  

We are seeing other executive and agency actions that add risk for the affordable housing system, both locally and nationally:  

• The White House has issued a record number of executive orders in its first 100 days including those with direct implications for housing and homelessness responses. These orders, and new administrative requirements, change terms and conditions to housing funding and planning approvals. For example, the July 24^th “Ending Crime and Disorder on America’s Streets” order directs cities to dramatically shift their responses to homelessness and mental illness and threatens to end funding and support for data-informed “housing first” approaches. There are also examples of anti-DEI federal oversight forcing the exclusion of terms like “equity” and “immigrant” to receive funding or approvals. 
• Tariffs on essential building materials may continue to have an inflationary effect on construction hard costs, even if interest rates are eventually lowered.  
• Legal uncertainty is heightened through pending lawsuits around some of the administration’s actions. This creates a deeper climate of caution and “wait and see” for funders, developers, and providers.  
• Expanded funding and activities by Immigration and Customs Enforcement (ICE) may impact construction labor availability. Some developers are already anticipating labor shortages for the construction sector. These immigration impacts may compound with tariffs to create the potential for much higher construction costs for projects.   
• Recission bills can be passed with a simple majority vote to cancel funding that was already appropriated by Congress, as we saw in July when a $9.4 billion recission package was passed by congress without review by Appropriations Committees. 
• Nonpayment of congressionally approved funds continues to create uncertainty for housing funders and providers that depend on funding for projects to stay on track. 

We will continue to watch as these federal actions play out. Regardless of the ultimate outcomes, we believe that increased national advocacy, creative problem solving, and local coordination will be essential in the coming months and years. We will only be successful together; the stakes are high for providers, developers, and those that depend on federally-supported affordable housing and social programs.