Housing industry leaders are expressing concerns about the Trump administration’s “skinny budget” proposal for fiscal year 2026 — specifically the steep budgetary cuts proposed for the Department of Housing and Urban Development (HUD).
The Trump administration’s budget recommendations, released on May 2, call for $163 billion in total cuts to non-defense discretionary spending. If enacted by Congress, HUD would be in line for $33.6 billion in cuts, representing a 43.6% decrease from its current funding level of $77 billion.
The lion’s share of HUD cuts would come from the proposed slashing of $26.7 billion from the State Rental Assistance Block Grant, which provides public housing assistance, tenant-based rental assistance and housing for older individuals and people with disabilities. The proposed budget would also eliminate the HOME Investment Partnerships Program, which provides funding to state and local governments for the creation of affordable housing for low-income households.
The White House presented the budget cuts as a way for states to take greater control of housing assistance programs.
“The Budget empowers States by transforming the current Federal dysfunctional rental assistance programs into a State-based formula grant which would allow States to design their own rental assistance programs based on their unique needs and preferences,” the budget outline from the U.S. Office of Management and Budget stated.
HUD Secretary Scott Turner praised the budget proposal in a statement, saying that it requires state and local governments to have more “skin in the game.”
“President Trump’s bold budget proposes a reimagining of how the federal government addresses affordable housing and community development,” Turner stated. “It rightfully provides states and localities greater flexibility while thoughtfully consolidating, streamlining and simplifying existing programs to serve the American people at the highest standard.”
Not everyone agrees with Turner’s assessment, including David M. Dworkin, president and CEO of the National Housing Conference, a nonprofit coalition of affordable housing leaders.
“President Trump’s proposed 2026 housing budget will drive up homelessness and force apartment owners and operators out of business,” Dworkin said in a statement. “These proposed reductions would have a devastating impact on millions of Americans, particularly the most vulnerable among us, and would directly lead to increased homelessness across the country and the bankruptcy of many private businesses that own and operate affordable housing.”
Marisa Calderon, president and CEO of the nonprofit advocacy group Prosperity Now, said in a statement that in addition to the proposed HUD cuts, she is concerned about the budget provision that would eliminate discretionary grants under the Community Development Financial Institutions (CDFI) Fund, which provides funding to financial institutions serving economically disadvantaged communities.
“CDFIs are not experimental, they’re proven, accountable and active in every congressional district,” Calderon stated. “Without discretionary funding, many of these institutions will have a harder time raising private capital, which results in fewer tools to meet rising needs, especially in communities where they’re often the only lenders willing to finance first-time homebuyers and main street businesses.”
A spokesperson for the Mortgage Bankers Association told Scotsman Guide that the association may weigh in on the budget later in the spring once additional details are available.
The final budget approved by Congress for fiscal year 2026 may look drastically different from the Trump administration’s proposal.
Senator Susan Collins, R-Maine, who chairs the Committee on Appropriations, said in a statement that she has “serious objections” to elements of the president’s budget request, noting that it is “simply one step in the annual budget process” and that the request was sent to Congress late and “key details still remain outstanding.” She added that the committee has an “aggressive hearing schedule to learn more about the President’s proposal and assess funding needs for the coming year.”
“Ultimately, it is Congress that holds the power of the purse,” Collins added.
