HOME Program Gets $5B+ Annual Boost & Overhaul: Bill Adds Loan Guarantees, Tweaks Affordable Housing Rules

This bill significantly reauthorizes and reshapes the HOME Investment Partnerships Program, a key federal tool for creating affordable housing. It locks in substantial funding – starting at $5 billion for fiscal year 2025 and increasing annually to over $6 billion by 2029 (Sec. 101). The main goal is to boost the supply of affordable homes and rental units by giving local governments and nonprofits more resources and updated rules to work with.

More Cash, Updated Playbook

The legislation pumps serious money into the HOME program, authorizing over $27 billion across five years (Sec. 101). It also gives participating jurisdictions – think states and larger cities – a bigger slice for administrative costs, bumping it from 10% to 15% (Sec. 102). This could mean better staffing and management for local housing projects. The bill also eliminates a key deadline requiring funds to be committed within a certain timeframe (Sec. 202), potentially reducing the pressure to rush projects and allowing for more thoughtful planning. Rules around how unused funds get redistributed are also tweaked (Sec. 103, 104), aiming to get money flowing more effectively to areas that can use it, while also adjusting eligibility thresholds for inflation.

Redefining 'Affordable' and Ownership Rules

What qualifies as 'affordable housing' gets a tune-up. The income limit for eligible homebuyers is raised slightly, from 95% to 110% of the area median income (or higher if the Secretary allows), potentially opening programs to more working families (Sec. 201). The bill formally recognizes small-scale housing (properties with 4 units or less) as eligible, provided rents are affordable and other requirements are met (Sec. 201). However, owners of these smaller properties get a pass on some standard tenant selection rules (Sec. 206), which might raise questions about fairness for potential renters.

For homeowners using HOME funds, the rules around selling the property are reformed (Sec. 203). Jurisdictions can now set resale restrictions designed to balance letting the owner get a reasonable return while keeping the home affordable for the next qualified buyer. There are also new allowances: community land trusts get specific rights to buy back properties to preserve affordability, rules can be waived for military members on deployment or relocation orders, and heirs can keep a home designated as affordable if they take over the obligations.

New Tools, Tougher Oversight

A major addition is the Home Loan Guarantee Program (Sec. 207). This allows the federal government (via HUD) to guarantee up to $2 billion in loans (initially) issued by participating jurisdictions for affordable housing projects. The idea is to unlock financing for projects that might otherwise stall, though it does introduce potential risk for taxpayers if these loans default. To use the guarantee, jurisdictions must show they couldn't get financing otherwise.

Alongside these new tools, the bill mandates on-site property inspections to ensure housing meets code (Sec. 204) and strengthens penalties for not following the rules (Sec. 205), allowing HUD to claw back funds used improperly. Rules for Community Housing Development Organizations (CHDOs) are also modified, aiming to clarify their role and how funds set aside for them are used (Sec. 301). While aiming for efficiency, several sections grant the HUD Secretary significant discretion in interpreting rules (e.g., Sec. 201 on foreclosure exemptions, Sec. 301 on CHDO participation), meaning how these changes play out could depend heavily on future guidance.