HOME Program Gets $6 Billion Boost and a New $4.5 Billion Loan Guarantee Fund: What It Means for Affordable Housing

The HOME Investment Partnerships Reauthorization and Improvement Act of 2025 is a major overhaul of the federal program that funds affordable housing development across the country. Think of the HOME program as the main piggy bank local governments use to build or rehab housing that regular folks can actually afford. This bill doesn’t just keep the program running; it throws serious money at it and changes some of the fundamental rules about who gets the cash and how they spend it.

The Money Pipeline Gets Bigger

First, the big numbers: The bill reauthorizes the program for five years and sets the authorized funding to climb every year, starting at $5 billion in 2025 and topping out at over $6 billion by 2029 (SEC. 101). That’s a huge signal that the government wants to ramp up affordable housing production. For local housing agencies, this means more grant money is potentially available to tackle long waiting lists and rising construction costs. This is the kind of cash injection that could actually move the needle in high-cost areas.

But here’s the catch: the bill also raises the amount local jurisdictions can use for administrative costs—the overhead, staffing, and paperwork—from 10 percent to 15 percent (SEC. 102). While program managers will argue they need more money to manage a bigger program, that 5-point jump means a larger chunk of that federal money is going to salaries and office expenses instead of directly into the brick and mortar of new affordable homes. If your local government gets $10 million, that extra 5% is $500,000 that’s not building housing.

New Rules for Staying Affordable

One of the most important parts of the HOME program is that the housing must stay affordable for decades. This bill introduces a few twists to those rules (SEC. 201). Normally, if a lender forecloses on an affordable property, the affordability covenant is supposed to remain. Now, the bill allows the affordability rules to be waived in certain cases, specifically if the property becomes financially unworkable due to “unforeseen events” outside the owner's control. While this sounds reasonable on paper—protecting an owner from a disaster—it hands the Secretary of HUD significant power to decide what qualifies as “unforeseen financial hardship.” It’s a potential loophole that could allow properties to slip out of the affordable housing stock prematurely if not policed carefully.

The bill also creates a special category for “small-scale housing” (four or fewer rental units), which can now qualify under slightly different rules. This is great for promoting smaller, scattered-site housing—think a duplex or a four-plex—but here’s the kicker: these small properties are exempted from certain tenant selection rules that apply to larger projects (SEC. 206). If you're a renter, this means you might lose some of the standard protections and oversight you'd get in a larger affordable complex.

The Federal Government Becomes a Loan Backer

Perhaps the biggest structural change is the creation of a brand-new Home Loan Guarantee Program (SEC. 207). This program allows local governments to get federal guarantees on loans they take out to finance affordable housing projects—things like buying land or building new units. The government is putting its full faith and credit behind these loans, guaranteeing 100 percent of the principal and interest. The total amount of outstanding guarantees is capped at $4.5 billion, with $2 billion authorized for the first year.

This is a huge lever to unlock private financing for projects that might otherwise struggle to get funding. However, local governments that use this guarantee must pledge their future HOME grant allocations as security. If a city defaults on one of these guaranteed loans, the federal government will pay the lender, but then HUD will simply reduce the city’s future housing grants to cover the loss. For taxpayers, the risk is that the U.S. government is on the hook for billions; for local governments, the risk is cannibalizing future housing funds if a project goes south.

Accountability and Flexibility

In a move that should improve housing quality, the bill mandates on-site property inspections for all properties funded by the program, whether the review is done by a local government or a state agency (SEC. 204). Even better, the results of every single review must be made public. This is a win for tenants and future residents, ensuring that “affordable” doesn’t mean “substandard.”

The bill also strengthens enforcement. If a local jurisdiction doesn't spend money correctly, the Secretary can now reduce their future payments by the amount misused (SEC. 205). This is a direct financial penalty that should make local officials pay closer attention to compliance.

Finally, for active-duty military families, the bill adds much-needed flexibility. If you own a home purchased with HOME funds and get deployed for 90+ days or receive a permanent change of station order, your local jurisdiction can waive or suspend the standard resale requirements (SEC. 203). This recognizes the reality of military life and removes a significant financial headache for service members who have to move on short notice.