HUD Proposes Scrapping Subsidy Boost for Green Affordable Housing

The Department of Housing and Urban Development proposed on April 30, 2026, to eliminate a provision from its earlier rulemaking that permitted participating jurisdictions to exceed maximum per-unit subsidies for affordable housing projects achieving certain green building standards, per the Federal Register notice.

The HOME Investment Partnerships Program, which provides federal block grants to states and localities for affordable rental and homeownership development, serves low- and moderate-income households nationwide. In fiscal year 2023, the program funded over 20,000 housing units and assisted more than 50,000 households, according to HUD's documented program data.

The proposed changes would affect participating jurisdictions, including state and local governments, that rely on these funds for projects targeting the homeless, elderly, individuals with disabilities, and other vulnerable populations, as outlined in the Federal Register topics.

Under the prior proposed rule published on May 29, 2024, in the Federal Register (89 FR 46618), jurisdictions could increase subsidies beyond standard limits for developments meeting specified environmental standards. The new supplemental notice proposes to revise or revoke these tenant protection provisions, removing the green building incentive.

It also introduces flexibilities for scattered-site manufactured housing rental projects, allowing more dispersed unit configurations. The changes would take effect upon final rulemaking, following the re-opened comment period closing on June 1, 2026, per the notice's DATES section.

Participating jurisdictions would need to adjust project planning by June 1, 2026, to submit comments on the revisions, potentially delaying final implementation until later in 2026 or 2027 based on standard HUD rulemaking timelines. Developers of affordable housing could face reduced funding options for sustainable features, shifting priorities toward cost containment over environmental upgrades in grant applications.

The added flexibilities for manufactured housing might accelerate approvals for such projects, enabling faster deployment of rental units in areas with housing shortages, as the notice specifies.

This supplemental notice builds on the original proposed rule issued under the Biden administration in 2024, which aimed to update and streamline the HOME program. The re-opening of comments, signed by President Donald Trump, extends the public input process by two years from the initial 2024 proposal, per the Federal Register document.