HUD issues FY 2026 Continuum of Care grant notice

Key Takeaways

On June 1, the U.S. Department of Housing and Urban Development (HUD) released a Notice of Funding Opportunity (NOFO) for the fiscal year (FY) 2026 Continuum of Care (CoC) Program Competition. The NOFO reflects the ongoing administration efforts to redirect permanent housing funding toward shorter term transitional housing and conditional wraparound services. It also reduces “protected” renewal funds, effectively making more funding fully competitive.  

The CoC program is the primary federal funding source for local efforts to prevent and end homelessness, and the revised competition introduces several changes that could affect county governments and local housing partners.

What is in the NOFO?

Under the NOFO, 60 percent of total funding will be considered “protected” under Tier 1, renewed on a non-competitive basis to ensure continuity of existing CoC operations. The remaining 40 percent will be awarded through a competitive process. Under the current program framework, nearly 90 percent of program funds are protected renewal funds. Additionally, renewal projects may be subject to audits or ongoing evaluations, increasing the importance of strong performance reporting, compliance and financial oversight.

The NOFO also places renewed emphasis on short-term transitional housing paired with wraparound supportive services, reflecting broader administration efforts to reform homelessness intervention models. While there is no specific "cap" on any particular project components (such as permanent supportive housing), there is a $1.3 billion set-aside for Tier 2 projects with explicit priority for transitional housing and supportive service projects. 

The notice includes provisions limiting the consideration of diversity, equity and inclusion (DEI) initiatives and race-based factors in program administration. Additionally, HUD introduced new merit and risk review criteria, including potentially subjective factors such as "self-sufficiency." Applicants should review the updated requirements carefully to ensure compliance with federal guidelines.

What’s next?

Counties interested in applying for FY 2026 CoC funding must submit applications by August 26, 2026, with HUD expected to announce awards by December 1, 2026, in accordance with congressional direction.

County officials, Continuums of Care and local housing providers should review the revised NOFO promptly and assess how the new funding priorities, competitive renewal structure and compliance requirements may affect local homelessness response strategies.