HUD Adopts New Rule for HOME Program, To Take Effect in April

The Department of Housing and Urban Development (HUD) recently adopted a rule update to its Home Investment Partnerships program (HOME). This is the first major update to the HOME program since 2013.

The HOME program was first authorized via the Cranston-Gonzalez National Affordable Housing Act of 1990 and has gone through multiple permutations since its rollout. Today, “HOME is really the flagship housing production product at HUD,” says Robert Henson, senior housing policy specialist at the National Council of State Housing Agencies (NCSHA). “It’s unique in that regard: there’s nothing else that’s solely dedicated to increasing the supply of affordable housing.”

A wide range of entities engage with the HOME program; in addition to all 50 states, hundreds of smaller, local entities serve as Participating Jurisdictions (PJs), each of which receives a share of HOME’s annual appropriations and administers the funds themselves. The program serves as one of the federal government’s largest block grants and helps support these PJs in administering a diverse array of low- and moderate-income homeownership and rental activities.

HUD first proposed the rules last March, after mounting administrative challenges and sustained advocacy pushed officials to streamline the program. After a lengthy comment period, HUD adopted the rules on January 6, 2025.

Though the new rule was initially supposed to go into effect in February, the new Trump administration has delayed final implementation until April. This type of delay is common and “perfectly legitimate,” says Henson, as incoming senior staff and political appointees want to ensure that rules from the previous administration align with their goals.

Though the changeover at HUD has brought deep staffing cuts and stark policy shifts, Henson expresses optimism that little, if anything, might be changed about the new rule. “I’m optimistic that once the new political and senior staff at HUD are in place and have a chance to look at the rule, they will find that there’s nothing in it that really is objectionable to them or really is political in any way that should make it controversial. It is pretty much value-neutral. It is very technically designed to improve the program’s administration.”

Additionally, the program itself “overall is popular in a bipartisan way,” says Frank Woodruff, executive director of the Community Opportunity Alliance (formerly NACEDA). “These are regulatory changes, and though we certainly like them, a lot of other entities like them. HUD did a really thoughtful job of trying to get this program to be as impactful as possible.”

In general, Henson says that most of the changes brought about by the new rule will simply make the program more efficient, increasing access to HOME dollars and decreasing the administrative burdens on participating entities. However, this doesn’t mean that more money will flow from the program. “The demand for HOME dollars exceeds the supply and has for many years simply due to the appropriations process,” Henson points out. “So, I don’t think there’s anything in this rule update that will change that and cause more HOME dollars to be spent, because all HOME dollars are already being spent.”

Expanding CHDO Access
One of the key changes to the new rule is streamlining the Community Housing Development Organization (CHDO) certification process. CHDOs are diverse, local nonprofit entities meant to work with PJs to effectively deploy HOME dollars in ways that benefit local communities. Though any nonprofit performing housing-related development and services for low-income people can receive HOME dollars through PJs, only a certain segment of nonprofits qualify as CHDOs. HUD sets the rules for how CHDOs are certified.

By statute, at least 15 percent of HOME dollars should go to CHDOs in a process known as the CHDO set-aside. Though the CHDO set-aside is a cornerstone of HOME, the number of new CHDOs has dwindled in recent years, largely due to HUD’s rules for certification, which have become “onerous,” says Henson.

In response, the new rules try to lower barriers to CHDO entry.

For example, they increase access to operating grants for CHDOs, which will “help organizations build out their capacity to eventually become CHDOs,” says Woodruff, allowing them to “maintain and grow their capacity to provide housing for the community.” This helps create deeper incentives for CHDOs to seek out deals and get excited about participating in the HOME program.

Further, several small but critical tweaks streamline organizational requirements, allowing greater structural flexibility for CHDOs. Previous rules required CHDOs to have staff with some level of technical expertise to meet certain capacity requirements. The new rule allows organizations to include volunteers, such as unpaid board members, to count towards their capacity requirement, greatly reducing cost burdens. Additionally, HOME regulations require some minimum representation within a CHDO of entities serving low-income communities, and the new rule update expands the eligibility of those entities. Finally, current regulations limit the number of public officials who can serve on a CHDO’s board, and the new rule narrows the definition of ‘public official’ in that context, widening the scope for potential board members.

Though seemingly niche, these important tweaks not only decrease administrative burdens for CHDOs but also “expand the universe of people in the community who can count towards CHDO requirements,” says Henson.

Woodruff says that these expanded rules will have a welcome effect on the production of rural housing. By increasing access to CHDOs and easing certification burdens, “hard-to-reach communities get resources that they wouldn’t otherwise have,” he says.

Bringing HOME into the LIHTC Fold
Beyond the CHDO changes, the new rule also aims to bring HOME’s regulatory regime in greater alignment with LIHTC rules, allowing developers to better interface with both programs.

Critically, the new rule allows owners to charge rent based on the permissible Housing Choice Voucher (HCV) or Project Based Voucher (PBV) rents, even when those rents would otherwise be higher than would normally be allowed for HOME. Though the change will indeed allow for extra rental income for properties on the operations side, Henson says that the larger impact for owners will be on the operations side. “One of the major goals for us as advocates, and I think for the folks drafting this rule, and the HOME participants, was to bring the HOME program into better alignment with LIHTC because they are so frequently used in conjunction with one another. So, establishing one common standard…for calculating the maximum permissible rents for both LIHTC and HOME is a big deal.”

Additionally, one of the major sticking points with HOME thus far has been the inability to use the same inspection standards when a project is using multiple HUD programs. Previously, owners using HOME dollars had to comply with inspection standards separate from those found as part of the Real Estate Assessment Center (REAC), which governs compliance for several different federal programs. Now, Henson says that HOME projects will generally be able to use those REAC standards—and the National Standards for The Physical Inspection of Real Estate (NSPIRE) in particular—for inspection requirements when pairing HOME dollars with other federal programs. “So, for example, if an inspection conducted for purposes of the LIHTC meets or exceeds the NSPIRE standard, that inspection will also now satisfy HOME requirements,” Henson says.

While the new rule certainly doesn’t solve this enduring problem, Henson says that HUD “went as far as they could with the statutory constraints that they’re under,” in synergizing HOME regulations with other federal requirements. “They didn’t go as far as we might have liked, but I don’t think that’s through any fault of theirs. I think it’s now Congress’s responsibility to update the statutes.”

Though bipartisan cooperation has been limited as of late, Henson seems hopeful that HOME can remain an oasis of agreement and support within the federal government. “I think everybody across the political spectrum acknowledges that there’s a really serious issue with the lack of supply of affordable housing in this country. And so, I think that in some regards, HOME ought to be more insulated from political considerations than other programs that HUD operates. That’s the nature of the program—or it should be, in my opinion—because it is really focused on supply right now.”