HUD’s proposed funding changes could disrupt housing for more than 170,000 people.
Communities across the country are raising concerns.
What’s Happening?
A NOFO — or Notice of Funding Opportunity — is the process HUD uses to set priorities and decide how federal homelessness funding is allocated through the Continuum of Care (CoC) program each year. It tells communities which CoC-funded programs HUD will support, how much funding they can expect, and the rules they must follow to keep people housed.
This year’s NOFO is different.
The CoC program typically operates on a two-year funding cycle. Communities plan around that cycle, expecting stable, procedural renewals that allow existing housing and services to continue without interruption.
Under the proposed changes, that expectation has been upended. Instead of routine renewals, communities are being asked to compete for new grants on an accelerated timeline. At the same time, funding is being shifted away from permanent housing, the stability that keeps more than 170,000 people safely housed.
The result is a scramble: local systems are rushing to prepare complex new applications while trying to prevent a funding gap that could leave people without homes long before any new programs could begin.
On December 8, 2025, HUD withdrew the NOFO shortly before a scheduled federal court hearing. But HUD has stated it plans to reissue the notice, and there is no indication that the policy changes will be revised. Communities now face significant uncertainty as current housing grants are set to expire in January 2026.
Local leaders warn that without action, many communities could run out of funding months before new programs could begin — a gap that would risk widespread displacement and strain emergency systems.
Why This Matters.
Puts Thousands at risk
Many residents in Permanent Supportive Housing (PSH) live on fixed incomes and can’t afford private-market rents.
threatens older adults & medically fragile neighbors
Nearly half of PSH residents are 55+ and rely on stable housing to stay healthy.
Destabilizes communities & small landlords
Losing nearly $2 billion in rental payments would strain landlords, shelters, hospitals, and public services.
Hear from landlords who rent units to veterans and formerly homeless tenants.
What we’re hearing from communities
Kentucky
Louisville Public Media recently reported that federal funding shifts could force hundreds of people back into homelessness, straining a system already stretched thin. Another article described a federal judge rebuking HUD for creating “intentional chaos,” leaving Kentucky providers scrambling to protect existing housing.
Maine
Local leaders estimate that more than 1,200 Mainers could lose their homes under the proposed changes, a scale of disruption that would overwhelm rural and urban areas alike.
Alaska
Anchorage Daily News warned that dramatic federal policy changes could destabilize the city’s homelessness response and threaten progress just as winter approaches — a time when losing housing can quickly become life-threatening.
West Virginia
According to West Virginia Watch, the proposed changes could cause more than 850 West Virginians to lose their housing, based on early analysis by the National Alliance to End Homelessness. The state could lose more than $7 million in funding for permanent housing programs — a devastating cut in communities already facing high poverty rates and limited service capacity.
From Anchorage to Louisville, Portland to Charleston, communities are saying the same thing: the proposed NOFO would take housing away from people who already fought hard to secure it — and would overwhelm local systems that are not built to absorb these losses.
What you can do
HUD may address the funding gap when it issues a revised NOFO, and Congress can also direct HUD to maintain CoC funding through the FY25 appropriations process. Right now, the priority is educating the members of the House and Senate THUD Appropriations Subcommittees about the impact of funding cuts on older adults, people with disabilities, veterans, and others who rely on existing CoC-funded housing and services.
If you are calling Congress, here are the talking points you should have on hand.
Stay informed
Get updates as the NOFO develops and as new resources become available
Help us stay connected to what’s happening locally
If you’re seeing the impacts of the proposed NOFO changes, we want to hear from you.
Sharing stories, data points, and credible coverage helps ensure this work reflects what’s actually happening on the ground.
For communities and providers
If you are responsible for local planning or communications, explore the NOFO Communications Toolkit.
Research and analysis
Impact Assessments
Impact Assessment: FY 2025 HUD CoC NOFO Impact on Private Landlords
Press releases
Frequently asked questions
How does the Housing for Urban Development’s (HUD’s) 2025 Notice of Funding Opportunities (NOFO) change the structure of funding to the Continuum of Care (CoC) Program?
HUD’s FY 2025 NOFO fundamentally reshapes the CoC program by reducing protections for existing housing and introducing far more competition and instability.
Under the NOFO, only 30% of a community’s funding is protected for renewal — down from the historical 90–95% — forcing most existing housing projects to compete nationally regardless of performance or local need. It also caps Permanent Housing renewals, including Permanent Supportive Housing and Rapid Re-Housing, at 30% of total renewal demand, even though many effective systems rely primarily on housing because it works.
These changes put an estimated $1.8 billion in annual rental payments to private landlords at risk and undermine housing stability for people least able to “turn over,” including older adults and people with disabilities. In effect, the NOFO shifts the CoC program from a stability-focused renewal system to one where most existing housing is newly at risk, prompting widespread concern and calls for Congress to temporarily renew current grants while reforms are reconsidered.
What is a Continuum of Care (CoC) and where does it operate?
A Continuum of Care (CoC) is a local or regional coalition that coordinates a community’s response to homelessness. Designated by the U.S. Department of Housing and Urban Development (HUD), CoCs bring together local governments, nonprofit providers, housing authorities, and other partners to plan, fund, and oversee housing and services for people experiencing homelessness.
CoCs manage federal CoC Program funding, which supports permanent supportive housing, rapid re-housing, outreach, coordinated entry, and homelessness data systems (HMIS).
CoCs operate nationwide. There are more than 400 HUD-recognized CoCs covering every state, including major cities, counties, and multi-county or balance-of-state regions.
What is Permanent Supportive Housing and who does it serve?
Permanent Supportive Housing (PSH) is an evidence-based housing model that combines long-term, affordable housing with voluntary supportive services. It is designed to help people who have experienced homelessness — particularly those with complex health or behavioral health needs — remain stably housed over time
Housing in PSH is permanent — tenants do not have time limits — and participation in services is voluntary, allowing residents to remain housed while accessing the level of support they need.
Decades of research show PSH improves housing stability, health outcomes, and public safety, while reducing costly use of emergency rooms, hospitals, shelters, and jails.
What is Transitional Housing and how does it differ from Permanent Supportive Housing?
Transitional Housing (TH) is a time-limited housing program designed to provide temporary stability for people experiencing homelessness while they work toward permanent housing. Stays are typically limited to up to 24 months and often require participation in services or programs as a condition of housing.
Permanent Supportive Housing (PSH), by contrast, provides long-term, affordable housing with voluntary supportive services and no time limit on how long someone can stay. PSH is designed for people with disabilities or complex health needs who are unlikely to achieve stability through short-term assistance alone.
How are residents impacted by the revised 2025 NOFO and how?
The revised FY 2025 NOFO puts many residents at risk of losing stable housing, not because their needs have changed, but because of structural funding shifts.
- Housing instability: Caps on Permanent Housing and reduced renewal protections may force communities to defund occupied units, causing residents to lose rental assistance even while complying with program rules.
- Risk of returning to homelessness: Many residents, especially older adults, people with disabilities, and veterans, cannot move to market-rate housing if assistance ends, making homelessness or institutionalization the most likely outcomes.
- Disrupted care: Funding gaps can interrupt case management and health services, increasing medical and behavioral health crises.
Bottom line: The NOFO shifts financial risk onto residents, threatening housing stability and well-being despite strong evidence that permanent housing works.
How are landlords impacted by the NOFO? What are the implications for landlord partnerships?
The FY 2025 NOFO destabilizes landlord participation by reducing protected renewals and capping permanent housing, putting an estimated $1.8 billion in annual rental payments at risk and making CoC-funded housing far less predictable. As funding becomes more volatile, many landlords may exit these partnerships, shrinking the supply of affordable units and undoing years of trust-building between communities and the private rental market.
Learn more in our Impact Assessment: FY 2025 HUD CoC NOFO Impact on Private Landlords.
Are there any avenues for bypassing HUD and extending funding to prevent lapses in rental subsidies that both tenants and landlords rely on?
Yes — Congress has the authority to prevent funding lapses, even if HUD proceeds with the revised NOFO.
The primary avenue is Congressional action through the appropriations process:
- Congress can direct HUD to temporarily renew existing CoC grants (for example, for 12 months), as it did previously in FY 2024. This would allow rental subsidies and services to continue uninterrupted while policymakers review or revise the NOFO.
- This approach does not require new funding. It preserves current contracts and prevents sudden disruptions to tenants, landlords, and local systems.
Absent Congressional direction, HUD has limited flexibility. While HUD can make certain administrative adjustments, it cannot, on its own, override funding caps, tiering rules, or timelines established in the NOFO in a way that reliably protects all existing housing.
Bottom line: There is no true way to “bypass” HUD administratively. Still, Congress can step in to stabilize funding by requiring temporary renewals of existing CoC grants — the clearest path to preventing lapses in rental subsidies for tenants and landlords.
There are lawsuits challenging the 2025 NOFO. Where do those stand, and what are the implications on NOFO funding?
Multiple lawsuits have been filed challenging HUD’s FY 2025 CoC NOFO, arguing that the changes conflict with federal law, exceed HUD’s authority, and risk widespread harm to people currently housed through the program.
Where things stand now:
- In response to litigation, HUD temporarily withdrew the NOFO shortly before a scheduled federal court hearing.
- HUD has since indicated it intends to reissue the NOFO, but has not committed to revising the underlying policy changes.
- The lawsuits are ongoing, and no final court ruling has been issued.
What this means for funding:
- The withdrawal did not extend or renew existing CoC grants. Housing and rental assistance tied to grants expiring in 2026 remain at risk.
- Until the courts rule or Congress acts, communities, residents, and landlords remain uncertain about whether funding will be renewed in time to prevent disruptions.
- Even if courts ultimately block parts of the NOFO, litigation alone does not guarantee continued funding absent Congressional or administrative action.
Bottom line:
The lawsuits have slowed, but not resolved, the threat posed by the FY 2025 NOFO. The most reliable way to prevent funding gaps remains Congressional direction to temporarily renew existing CoC grants, regardless of how the litigation unfolds.
