HUD Keeps HOME Subsidy Limits Lower

HOME program update

HOME funding remains a critical piece of many affordable housing deals. With updated limits now in place, teams will need to adjust how they plan…

HUD just released an update keeping HOME subsidy limits lower than many expected. This decision will directly affect how many affordable housing deals come together, how they’re structured, and how owners, developers, and agents approach HOME-funded projects moving forward.

HUD considered increasing the maximum per-unit subsidy limit from 240% to 270% of Section 234 mortgage limits. Instead, the agency chose to stay at 240%.

The reasoning is straightforward. Higher per-unit subsidies would allow more spending per unit but fewer units overall.

The updated limits apply to any HOME funds committed on or after May 11, 2026:

1-bedroom units cap at about $215,000
2-bedroom units cap at about $261,000
3-bedroom units cap at about $338,000

HUD will update these limits annually, so this isn’t a one-time change.

Impact on Multifamily Housing

This change will show up quickly in how deals are put together.

Less flexibility with HOME funds
You will not be able to stretch HOME dollars as far per unit. That means you may need to lean more on tax credit equity, soft funding, or other sources to close the gap.

High-cost deals will feel the pressure
Projects with higher per-unit costs, whether from new construction, larger unit sizes, or complex rehabs, can hit these limits quickly. Some may need to be reworked or supported with additional funding.

Cost decisions matter earlier
Design choices, scope, and budgeting will carry more weight upfront. Small decisions early on can make the difference in staying within limits.

Take another look at your pipeline
If HOME funds have not been committed yet, now is a good time to revisit your numbers. Deals that worked before may need adjustments under these limits.