HUD Publishes HCV FY 26 Funding Notice

Info on EHV Funding Not Included

On May 6, HUD published notice PIH 2026-12,  Implementation of the Federal Fiscal Year (FFY) 2026 Funding Provisions for the Housing Choice Voucher Program. The notice provides information on voucher renewals, administrative fees, and set-aside funding, as well as offsets and allocation of incremental vouchers. All HAs administering a voucher program should have received correspondence with a funding enclosure listing both renewal allocation and offset calculations. For initial MTW agencies, a separate notice will provide details on offset calculations and appeal policies and procedures.

Disappointingly, HUD has not provided details regarding how it intends to utilize TPV funding to prevent Emergency Housing Voucher (EHV) terminations. Instead, the Department will provide information through a future notice. HUD notes, however, that recaptured EHV service fees are available to cover EHV shortfalls, and agencies anticipating EHV shortfall “in the coming months” should reach out to their financial management center financial analyst (FMC FA), with a copy to EHV@HUD.GOV, to request funding to cover EHV shortfalls.  The notice does include a new exception to the general prohibition on use of FY 26 funds for over-leased units. This exception allows for limited use of FY 26 funding for over-leased units due to the transition of EHV households to the HCV program. This exception is for FY 26 only. 

In addition, Mainstream Voucher funding and administrative fees are now included in the standard HCV Housing Assistance Payment (HAP) and administrative fee funding allocations. Mainstream vouchers must still be reported separately in the Voucher Management System (VMS). PHADA is concerned about the complexity of potential shortfall tracking and reporting, and the associated administrative burden, this change may cause. 

Extensive Shortfalls Expected Despite 100% Proration, Set-Asides To Be Limited

The initial estimated HAP proration amount is 100 percent. Despite this high proration level, HUD is forecasting extensive shortfalls. This is largely because the Renewal Funding Inflation Factors (RFIF), are not consistent with actual cost increases experienced by most programs. As a result of this funding squeeze, the Department states that HAP set-aside categories other than shortfall may not be funded. There are also new requirements for some set-aside categories. 

As in prior years, the primary set-aside category is Category 1: Prevention of Terminations Due to Insufficient Funds. As of this edition of the newsletter, HUD remains unsure if set-aside funding combined with offset funding and Tenant Protection Voucher (TPV) funding will be adequate to prevent terminations. Therefore, other set-aside categories may not be funded. 

Those other set-aside categories are:

1. Unforeseen circumstances
2. Portability
3. Project-based vouchers
4. MTW Expansion HA development adjustment
5. HUD-VASH
6. Lower-than-average leasing (Not available for FY 26) 
7. Disaster
8. Non-life-threatening inspection withheld HAP, and 
9. Mainstream vouchers increased costs

The deadline to complete an application for most categories is June 26, 2026. For shortfall, the deadline is January 29, 2027. For HUD-VASH, the deadline is September 25, 2026. For disaster (category 8), the deadline is December 18, 2026. 

Limits on TPVs 

For FY 26, Tenant Protection Vouchers (TPVs) will generally only be awarded for vacant units that were occupied within the last 12 months, rather than the 24 months permitted in prior years. HUD may take other steps (such as not funding any vacant units) if funding limitations require it. 

HUD has also not provided any information on how the provisions of the FY 26 appropriations act allowing use of TPV funds to prevent EHV terminations will be implemented. While some are advocating for the awarding of TPVs to EHV households, this would result in an ongoing obligation to continue the funding of those vouchers beyond FY 26. It is not clear if the legislative language authorizes this action. HUD may choose to authorize funds to agencies with EHV households they are unable to absorb into their standard HCV program to prevent terminations during 2026. This could effectively push the potential crisis date back, while HUD aims for attrition and absorption of EHVs to reduce that future obligation and risk. As these issues become clearer, PHADA will provide updates via Breaking News, the Advocate, and social media as soon as HUD releases the promised future notice on this topic.

New Incremental Vouchers for HUD-VASH and Family Unification Program

The FY 26 appropriations act provided $15 million for HUD-VASH, with at least $5 million for new incremental HUD-VASH vouchers with the remainder used for HUD-VASH administrative fees or other related costs. These vouchers will be awarded based on geographic need and administrative performance. Future comprehensive guidance will be issued with details on the HUD-VASH voucher allocation and administrative fee funding. 

The FY 26 appropriations act provided $30 million for new incremental vouchers for the Family Unification Program (FUP). HUD will issue a Notice of Funding Opportunity (NOFO) for $5 million in FUP funding. The remaining $25 million will be allocated to the newly renamed Melania Trump Foster Youth to Independence (FYI) Initiative on a non-competitive basis under PIH Notice 2023-04 (or subsequent notice). 

Administrative Fees and Special Fees

The notice describes the processes and data used in establishing administrative fee rates, including portability fee rates, and the process for requesting a blended administrative fee rate (available when an agency covers multiple administrative fee areas) or a higher administrative fee rate (available when an agency covers a large area of two or more counties). The deadline for requesting blended or higher administrative fee rates is July 10, 2026. 

For FY 26, $30 million of the $2.836 billion appropriated for administrative fees is designated for Special Fees categories. Except as noted below, special administrative fees are determined and calculated directly by HUD. Existing and ongoing special fee categories include:

1. V Homeownership Program Closings (HUD will contact eligible PHAs, $1,500 per closing)
2. Establishing a new HCV Homeownership Program (HUD will contact eligible PHAs, one-time $2,500)
3. Administering TPVs associated with a Multifamily Housing Conversion Action
4. Portability
5. Audit Costs for Declaring Major HCV Programs per Notice 2021-08, or for HCV Voluntary Transfers per Notice 2018-12 (Agencies must email a request to the FMD)
6. New FUP/FYI Vouchers Awarded
7. Disaster Vouchers
8. Transition of EHV to HCV or PBV (based on transactions submitted to IMS/PIC by February 27, 2027, $1,000 per transitioned household)
9. PHA Elimination of Exception Payment Standard (NEW! Application link in notice, submit by October 30, 2026, up to $3,000)
10. Secre

Regulatory Reminders

Throughout the notice, HUD includes a variety of regulatory reminders. These include the allowed uses of administrative fees in PIH Notice 2022-18, TPV terms and conditions in PIH Notice 2019-01, and the ongoing requirements to be current in registrations at SAM.GOV. 

PHADA will continue to advocate for maximum funding and maximum flexibility in the HCV program generally, and for funding and regulatory strategies that ensure that all households remain housed and that termination of vouchers does not occur.