The U.S. Department of Housing and Urban Development (HUD) has finalized long-awaited changes to the HOME Investment Partnerships Program. The new rule, released this spring, is the first major update since 2013. It modernizes funding rules, streamlines compliance, and gives local governments more flexibility when developing affordable housing.
What is the HUD HOME program?
The HOME program is the largest federal block grant aimed at building and preserving affordable housing. States and localities use it to construct rental units, rehab existing homes, and assist low-income homebuyers. In 2024, Congress allocated nearly $1.25 billion to HOME activities across the country.
Key changes coming to HUD in 2025
The new rule includes several updates designed to speed up projects and expand housing access:
- Increased subsidy limits: Local governments can now invest more HOME dollars per unit, which will help offset rising construction costs.
- Streamlined inspections: HUD revised inspection standards to reduce duplication with other federal programs.
- Expanded use of funds: The rule allows greater flexibility for using funds in transitional housing and for tenants facing unique needs.
- Income eligibility adjustments: New thresholds will align more closely with local conditions, allowing communities to target aid more effectively.
- Longer affordability periods for some projects: To ensure long-term benefit, HUD extended affordability requirements for higher-cost developments.
Why this matters for local governments and developers
City and county housing officials say the rule simplifies the development process and makes it easier to fund projects in high-cost areas. Developers welcome the higher per-unit limits, which reflect today’s building costs. These updates should reduce project delays and help move more units into construction faster. The new rule also reduces red tape, allowing housing departments to focus more on delivery and less on paperwork.
What renters and buyers should expect
Renters won’t see changes immediately, but the updated rule should lead to more affordable units over time. First-time homebuyers could benefit from increased down payment assistance in some jurisdictions. Local agencies will have more tools to tailor aid to specific housing challenges—whether that’s overcrowding, homelessness, or a lack of senior housing.
When the new rules take effect
HUD says the rule will take full effect for fiscal year 2026 HOME allocations, but some provisions may be adopted earlier depending on local agency readiness. Training and implementation guidance is already being shared with grantees.
Bottom line: faster projects, more flexibility
HUD’s updated HOME rule gives cities and states more room to meet local needs. By raising funding caps and reducing delays, the rule aims to make affordable housing easier to build and sustain. Stakeholders should review the changes now and prepare for a more streamlined process in the year ahead.
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