Government Grants for Affordable Housing: Where the Money Goes and How You Can Benefit

How federal housing money reaches your town

Most federal housing dollars come from two agencies: the Department of Housing and Urban Development (HUD) and the Department of Agriculture’s Rural Development office (USDA). Congress sets the amounts each year, and the agencies pass the money to grantees using formulas or competitions. Those grantees then decide which projects and households to help, within federal rules.

That last row is the exception that proves the rule. A small number of programs do pay individuals directly, but most “housing grants” you read about are grants to institutions.

HOME and CDBG, the flexible local grants

The HOME Investment Partnerships Program is the largest federal block grant aimed only at affordable housing. States and local “participating jurisdictions” use it to build and rehabilitate rental and owner housing, give tenant-based rental help, and offer down payment assistance. Local governments must add matching funds, and homes built with HOME money carry rent or income limits for years. If your city has a first-time buyer program or an owner-occupied rehab loan, there is a good chance HOME money is behind it.

The Community Development Block Grant is broader. Cities and counties can spend it on sidewalks, senior centers, and small business help as well as housing. Many use part of it for emergency home repairs, accessibility changes, or lead paint removal for low- and moderate-income owners. These programs are usually run by a city or county community development office and open for applications only at certain times of year.

To find them, search your city or county website for “community development” or “housing rehabilitation,” or call 211. Each program sets its own income limit, typically a share of area median income.

Housing Trust Fund and housing tax credits

The national Housing Trust Fund is different from most HUD programs because it is paid for by contributions from Fannie Mae and Freddie Mac rather than yearly appropriations. HUD distributes it to states by formula, and it is aimed at rental housing for extremely low-income households, those at or below 30 percent of area median income or the poverty line. States usually award it to developers alongside other funding.

The Low-Income Housing Tax Credit (LIHTC) is not a grant at all. It is a federal tax credit that state housing finance agencies award to developers, who sell the credits to investors to raise money to build or renovate apartments. In return, units must stay affordable to households under set income limits, usually for 30 years or more. It produces more affordable rental housing than any other federal program. You can search for tax credit properties near you in HUD’s LIHTC database and apply directly to the property’s management office.

Tax credit rents are capped but not tied to your income, so they can still be hard to afford on a very low income. Many LIHTC properties accept housing choice vouchers, which close that gap.

Section 202 and 811 for seniors and people with disabilities

Section 202 Supportive Housing for the Elderly funds nonprofit sponsors to build and run apartments for very low-income people 62 and older, often with service coordinators who help residents stay independent. Section 811 Supportive Housing for Persons with Disabilities does the same for very low-income adults with disabilities, often in partnership with state Medicaid and disability agencies.

Residents of both usually pay about 30 percent of adjusted income for rent. You apply at each property, and waiting lists are common. Ask each property how its waiting list works and how often to check in. Both programs received more money in FY2026, as the table below shows.

USDA rural housing programs

USDA Rural Development runs housing programs for towns and open country, generally places with populations under 35,000. Several reach people more directly than HUD grants do:

• Section 504 Repair Loans and Grants: grants of up to $10,000 for very low-income owners 62 and older to remove health and safety hazards, which can be combined with a low-interest repair loan. Details below.
• Mutual Self-Help Housing (Section 523): grants to nonprofits that organize groups of families to build their own homes together, putting in their own labor in place of a down payment.
• Housing Preservation Grants (Section 533): grants to local groups that repair homes for low-income rural owners and renters.
• Multifamily rental housing: USDA-financed apartments, some with rental assistance that keeps a tenant’s share near 30 percent of income. You can search them on USDA’s rental property finder.

To see whether an address counts as rural, use USDA’s property eligibility map.

Federal housing funding changes in 2025 and 2026

Federal housing funding went through an unusual stretch. The administration’s FY2026 budget request proposed ending HOME and CDBG funding and restructuring federal rental aid, and the House bill at one point also zeroed out HOME. Congress settled the year in H.R. 7148, the FY2026 appropriations law, which passed the House on February 3, 2026 and was signed into law. According to the Housing Assistance Council’s summary, final levels compared with FY2025 were:

The same summary says the law included money to renew Emergency Housing Vouchers created during the pandemic, and directed one-year renewals of Continuum of Care homeless grants expiring in early 2026 while lawsuits over HUD’s proposed changes to that program continue. Some reports put the Senate’s CDBG figure ($3.1 billion) in place of the final one, so if you see different numbers, that is likely why.

On the tax side, the reconciliation law signed July 4, 2025 (Public Law 119-21) expanded the Low-Income Housing Tax Credit. Starting in 2026, it raised each state’s 9 percent credit allocation by 12 percent and lowered the share of a project that must be financed with tax-exempt bonds to qualify for 4 percent credits from 50 percent to 25 percent. Housing groups expect that to add rental units over several years, though new buildings take time to open.

The fiscal year that began October 1, 2026 is funded under separate legislation. We had not confirmed final FY2027 housing levels when we checked, so watch your state or city housing office for changes to local programs.

Down payment assistance through state agencies

For buyers, the most direct benefit of affordable housing money is help with the down payment and closing costs. Every state has a housing finance agency (HFA), and many cities and counties run their own programs, often with HOME or local funds. HUD lists local homebuying programs by state on its state resources page.

Programs vary, but most share a few features:

• Forms of help: true grants are rare. More often it is a forgivable second loan that disappears if you stay in the home for a set number of years, or a deferred loan repaid when you sell or refinance.
• Limits: household income and home price caps, which differ by county and household size.
• First-time buyer rule: often defined as not owning a home in the past three years, with exceptions in some programs.
• Education: a homebuyer class from a HUD-approved counseling agency is usually required.

Read the repayment and resale terms before you sign. Our down payment assistance program guide explains how to compare offers. Some housing choice voucher holders can also use the voucher toward a mortgage through their agency’s homeownership option, if the agency offers one.

Repair grants for homeowners

The clearest example of a federal grant paid for an individual’s home is USDA’s Section 504 program. Owners who live in an eligible rural area, earn no more than the very low-income limit (50 percent of area median income), and cannot get affordable credit elsewhere can qualify for:

• Grants up to $10,000 for owners 62 and older, used to remove health and safety hazards.
• Loans up to $40,000 at a fixed 1 percent rate for 20 years, for repairs and improvements.
• A combination of the two, up to $50,000.

The grant must be repaid if you sell the home within three years. Our Section 504 home repair program guide walks through the application. In cities and suburbs, the equivalent help usually comes from CDBG- or HOME-funded rehab programs, the federal Weatherization Assistance Program, and nonprofit repair groups.

Vouchers and public housing for renters

For renters with the lowest incomes, the biggest share of federal housing money arrives as rent help. The housing choice voucher program, often called Section 8, pays part of the rent on a private home, and you usually pay about 30 percent of adjusted income. Public housing is owned by local housing agencies, with rent based on income. Both are run by your local public housing agency, and both usually have waiting lists, some closed for years.

USAGov explains how vouchers work and how to reach your agency on its Section 8 page. Our guides to the housing choice voucher program and public housing cover eligibility and how to get on lists. Because each agency keeps its own list, applying to several agencies that are open widens your chances.

Habitat for Humanity and local housing trust funds

Habitat for Humanity does not give houses away. Future homeowners partner with a local Habitat affiliate and volunteers to build or rehab a home, take financial education classes, and then buy it with an affordable mortgage. The payments help fund the next home. Many affiliates also run repair programs for older owners. You apply through your local affiliate, which sets income ranges and timing.

Many cities, counties, and states also have their own housing trust funds, paid for with sources such as real estate transfer taxes, developer fees, or local bonds. These are separate from the national Housing Trust Fund. They often support local down payment programs, emergency repairs, or new affordable apartments. Your city housing department, a local community land trust, or 211 can tell you what yours supports and when applications open.

Government grants for affordable housing scams

Because “free government housing grant” is such a common search, it attracts scammers. The FTC’s grant scam guide describes the pattern: a call, text, or ad says you qualify for a grant, then asks for a processing fee, a gift card, or your bank details. USAGov’s no free money page makes the same point. Remember:

• Federal agencies do not contact individuals offering housing grants.
• Real programs never charge a fee to apply or to release money.
• Grants listed on USAGov’s grants page and Grants.gov are mostly for organizations, not personal bills.

If you have already paid, contact your bank right away and report it to the FTC. Then go back to the real programs in this guide, all of which are free to apply for.

Related guides

• Federal home repair grants
• Public housing
• Low-income senior housing
• Emergency housing assistance

Frequently asked questions

This guide is general information. Funding levels and program rules change each year, and local programs set their own limits and deadlines, so confirm details with the agency that runs the program. National Relief Program is an independent website and is not affiliated with HUD, USDA, Habitat for Humanity, or any government agency.