Financial Services Committee Advances Reconciliation Bill with Historic Housing Program Investments

The House Financial Services Committee today voted to favorably report legislation that would appropriate more than $300 billion in funding for affordable housing programs, including historic investments in HOME and the Housing Trust Fund. The bill also would create a new program, the First-Generation Downpayment Fund, through which states and nonprofits would provide first-time home buyers whose parents did not own homes with grants for down payment assistance and other expenses associated with purchasing a home.

The committee’s bill is intended to be included as part of a larger package that could provide up to $3.5 trillion in new federal spending and tax expenditures, which Congress authorized in a Budget Resolution passed last month. Other House committees are considering their reconciliation bills this week as well, with the stated goal of finishing them by September 15.

The committee approved the bill by a party-line vote of 30–24, with all Democrats voting in favor and Republicans in opposition. Chair Maxine Waters (D-CA) and other committee Democrats argued the bill provides much-needed investments to address the nation’s affordable housing shortage and other community development needs. Committee Republicans criticized the levels of spending in the bill, which they contended are fiscally irresponsible and would boost inflation.

The bill provides $34.77 billion for HOME and $36.77 billion for the Housing Trust Fund, with the funds to remain available through fiscal year (FY) 2031. Significant funding for each program was among NCSHA’s priorities for the reconciliation package, which we outlined in letters to congressional leadership and the leaders of the relevant committees.

The bill exempts the HOME funds provided in the legislation from several statutory program requirements, including that all HOME funds be committed within 24 months, that participating jurisdictions (PJs) match a portion of HOME funding received with their own funds, and that PJs allocate at least 15 percent of their HOME funding toward projects involving Community Housing Development Organizations. NCSHA advocated for these exemptions in our discussions with committee staff.

The First-Generation Downpayment Fund would receive $10 billion through FY 2031, with $6.825 billion going to states and $2.275 billion awarded competitively to Community Development Financial Institutions (CDFIs) and other entities. The funds could be used to help first-generation home buyers, defined as “those who attest that neither they nor their parents have previously owned a home.” Eligible expenses include down payment assistance, closing cost assistance, and interest rate reductions. Funds also could be used to finance pre-purchase modifications needed to make a home accessible for the buyers or members of their household. Home buyers cannot receive assistance that exceeds 10 percent of the home’s purchase price or $20,000, whichever is greater. HUD is allowed to increase the maximum assistance amount for home buyers who are considered economically disadvantaged.

At the urging of NCSHA, the version of the bill approved by the committee will allow states to use 10 percent of funding received for the First-Generation Downpayment Fund for administrative and staffing expenses. The original version of the bill allowed grantees to use six percent of program funds for administrative expenses, an amount NCSHA felt was too low to allow the program to operate successfully.

Other provisions in the bill include:

• $76.5 billion to support capital repairs for public housing;
• $75 billion for Housing Choice Vouchers, with $24 billion targeted to individuals and families experiencing or at risk of homelessness and survivors of domestic violence and human trafficking;
• $15 billion for Project-Based Rental Assistance;
• $10 billion for a new Housing Investment Fund which provides grants to CDFIs and other nonprofit developers;
• $10 billion for lead paint removal;
• $8.5 billion for the Community Development Block Grant program, with $1 billion set aside to address housing and infrastructure needs in colonias and $500 million set aside to support manufactured housing needs;
• $2.75 billion for an initiative similar to the Choice Neighborhoods program;
• $2.536 billion for Section 202 Supportive Housing for the Elderly;
• $898 million for housing for persons with disabilities;
• $480 million to subsidize 20-year mortgages for Federal Housing Administration borrowers;
• $100 million to support a pilot program supporting small-dollar mortgage lending ($100,000 or less); and
• Forgiving the National Flood Insurance Program’s (NFIP) outstanding debt and appropriating $3 billion for NFIP mapping and risk analysis and $1 billion for a program subsidizing affordable NFIP premiums for low-income households.