The final FY 26 Transportation, Housing & Community Development (THUD) spending bill that funds HUD’s housing and community development programs was released last week. The bill provides a total of $77.3 billion for HUD programs, an approximately $7.3 billion increase over the previous fiscal year. This is more than double the $3.3 billion provided for HUD programs in the Senate’s FY 26 spending bill, while the House’s FY26 spending bill called for a $2.2 billion cut to HUD programs. Housing Counseling Assistance program received level funding from the previous year, $57.5 million. The National Low Income Housing Coalition (NLIHC) has created a full analysis and budget chart with funding levels for key housing programs.
Notably, the final THUD bill does not include harmful policies outlined in the original House spending bill, such as work requirements, repealing the 30-day eviction notice requirements for households receiving HUD assistance, and withholding funds for sanctuary cities. In response to the FY 26 Continuum of Care (CoC) Notice of Funding Opportunity (NOFO), the bill establishes a renewal timeline for expiring CoC grants. It also preserves 60% of the funding for proven solutions like permanent supportive housing and rapid rehousing. Unfortunately this DOES NOT mean that future attempts to implement the harmful policy and program changes for CoC funding will cease.
The final THUD bill passed in the House (341-88) with strong bipartisan support last week in a package alongside two other spending bills. The contentious Department of Homeland Security (DHS) bill was voted on separately and passed with narrower margins (220-207). After passing in the House, the bills were combined into a broader 6-bill minibus in the Senate. In the wake of the killing of Alex Pretti in Minneapolis on Saturday, January 24, Senate Democrats are demanding that the Department of Homeland Security (DHS) bill be removed from the FY26 minibus package that includes the THUD bill.
This week, Senate Minority Leader Chuck Schumer (D-NY) demanded that the DHS bill include sweeping reforms to how Immigration and Customs Enforcement (ICE) operates. New policies would include a requirement to coordinate with local and state police, a ban on patrols, and a new code of conduct. ICE agents would be banned from wearing masks and instead required to carry identification and wear body cameras in line with general standards for law enforcement. According to Schumer, Democrats are “united” behind these reforms and will not pass a DHS bill until they’re included. While some Republican Senators may be open to negotiation, others–including Senator Thom Tillis (R-NC)–are opposed to some of the suggested reforms.
According to analysis from our colleagues at the National Low Income Housing Coalition, it’s unclear if the DHS bill can be removed from the broader spending package. If the DHS bill is kept in the minibus, any revisions to it would require another vote in the House to pass. But with the House out until February and the current continuing resolution (CR) set to expire at 12:01 a.m. on Saturday, January 31, the federal government would enter a partial shutdown before a vote occurs. These six remaining spending bills in the minibus account for 75% of all federal discretionary spending, meaning a partial shutdown would have widespread impacts on many federal programs. The SNAP program should not be affected because Congress voted in November to fund SNAP through September 30, 2026.
With a standoff forming between Senate Democrats and Senate Republicans, a shutdown this weekend appears likely. What remains to be seen is how long the fight over DHS reforms will keep the government in a partial shutdown, and whether the THUD and other remaining spending bills can be passed separately in the near future. As we enter the second year of this administration, it appears that uncertainty and delays around essential funding for housing and community development will continue.
