June 2025 Rural Development Housing News

FY26 Housing & Rural Development Funding Update

On May 30, the White House released a more detailed FY26 budget proposal, and on June 5, the House Appropriations Committee followed with its draft USDA funding bill. The two proposals diverge significantly:

• USDA Programs:

  • The House bill largely maintains FY24/25 funding levels.

  • The Administration's proposal includes deep cuts, eliminating support for the Section 502 direct loan and self-help housing programs, while maintaining funding for Section 502 loan guarantees.

  • Both proposals increase funding for Section 521 rental assistance, but the Administration would cut Section 515 and Multifamily Preservation and Revitalization support and eliminate USDA rental vouchers.

  • A proposed $100 million Rural Financial Assistance Program would be created under the CDFI Fund, but most current CDFI programs, including Native CDFIs, would be defunded.

• House Markup (June 11):
  Ranking Member Sanford Bishop (D-GA) proposed amendments to boost housing funds, but they were not adopted. The bill continues the trend of earmarking funds through the Community Facilities Grant Program.

• HUD Programs:
  No FY26 bills have been introduced by either chamber. However, hearings on the HUD budget took place June 10–11.
  The Administration’s proposal would:

  • Eliminate HOME, CDBG, SHOP, Rural Capacity Building, and Native American competitive programs.

  • Consolidate major programs like Tenant-Based Rental Assistance, Public Housing, Section 202, and Section 811 into a reduced block grant to states.

HUD Proposes Ending Affirmative Fair Housing Marketing Rule

HUD has proposed eliminating its Affirmative Fair Housing Marketing (AFHM) requirements, which currently apply to property owners receiving FHA insurance or Multifamily Housing assistance. These rules ensure outreach to groups protected by fair housing laws—such as by race, national origin, disability, and other categories—who might otherwise be unaware of available housing.

• If adopted, the proposed rule would remove all AFHM obligations.

• This follows a March proposal to scale back other fair housing requirements unrelated to marketing.

• Public comments are due by July 3.

More information is available on HUD’s website.

Leadership Updates at USDA and HUD

On June 10, the Senate confirmed two key leadership roles:

• Stephen Vaden as Deputy Secretary of USDA

• Andrew Hughes as Deputy Secretary of HUD

In addition, President Trump has nominated Glen Smith to serve as Under Secretary for Rural Development at USDA. Smith, an Iowa-based agricultural businessman and farmer, currently serves on the boards of the Farm Credit Administration and the Farm Credit System Insurance Corporation.

HUD Extends HOTMA Compliance Deadline for Multifamily Programs

HUD has issued Notice H-2025-03, extending the compliance deadline for certain provisions of the Housing Opportunity Through Modernization Act (HOTMA).

• Properties receiving assistance from Section 8 Project-Based Rental Assistance, Section 202 (elderly housing), Section 811 (housing for people with disabilities), and several FHA multifamily programs now have until January 1, 2026 to implement new income and asset rules.

• This is a six-month extension from the original July 1, 2025 deadline.