In-Depth Analysis of the FY 2026 CoC NOFO

On June 1, 2026, HUD published the fiscal year (FY) 2026 Notice of Funding Opportunity (NOFO) for the Continuum of Care (CoC) Program and Youth Homelessness Demonstration Program — making $4.04 billion available to support homelessness assistance programs nationwide.

The Department expects to make approximately 7,000 awards available with a minimum award amount of $2,500 and an award maximum of $25 million. Applications for the NOFO are due by August 26, 2026, at 8 p.m., ET.

The CoC Program is HUD’s primary competitive grant program for ending homelessness. Eligible applicants include Continuums of Care, nonprofit organizations, local governments, public housing agencies, tribes, and other eligible entities.

Renewal projects continue to be eligible for funding — CoCs will submit consolidated applications, and permanent supportive housing (PH-PSH), rapid rehousing (PH-RRH), HMIS, transitional housing (TH), supportive services only (SSO), planning grants, and YHDP activities remain eligible uses of funding. The NOFO also continues to emphasize system performance, housing outcomes, local coordination, and organizational capacity.

However, the FY 2026 NOFO reflects a significant shift in HUD’s homelessness policy priorities, most notably a shift away from the Housing First-centered approach that has guided CoC competitions for much of the past decade. With this shift comes major changes to the application process with greater emphasis on addressing the underlying causes of homelessness through treatment, recovery, employment, and self-sufficiency strategies.

Major Changes to the Application Process

Last November, the Department tried to make changes to the application process for the FY 2025 NOFO. Most notably, the changes would have capped use of funding for permanent housing projects (PSH and RRH) to 30% and decreased the protected funding amount for Tier 1 grantees. The FY 2026 NOFO does not include the same identical changes as the NOFOs released by HUD in 2025, however, the changes do still focus on expanding other forms of projects over PSH and RRH.

Major changes to the FY 2026 NOFO include:  

Creates $1.3 Billion Set-Aside for New TH and SSO Projects

The NOFO sets aside $1.3 billion in funding for new projects with a priority for TH and SSO projects. This set-aside is expected to limit total funding available for other types of projects including PH-PSH and PH-RRH—which made up 82% of funding for FY 2024. In FY 2024, TH and SSO projects only made up a total of 6% of funding or $218.8 million. The Department emphasizes in the NOFO that CoCs may use the Transition Grant process in the NOFO (Sec. II.B.3.k) to create new projects and has created guidance for CoCs on moving individuals/families from permanent housing to TH. The guidance provides information and examples on transitioning people but does not include various factors that may prevent that transition, which include accessibility needs, conditions of those who are chronically homeless, or people requiring ongoing supportive services and permanent subsidies.

This change is expected to deprioritize Tier 2 renewals as new Tier 2 projects (TH and SSO projects) will take priority.  Renewal projects defined as Tier 2 are unlikely to be awarded due to this change.

Decreases Percent of Annual Renewal Demand for Tier One Projects

Under the FY 2026 NOFO, the Annual Renewal Demand (ARD) threshold percent, which is the amount of funding a CoC needs to renew all its grants for one year, will be decreased from 90% to 60% for Tier 1 projects. Tier 1 projects are the highest prioritized existing projects that CoCs seek renewal funding for based on local needs and priorities. These projects must meet eligibility, quality, and renewal threshold criteria, but they do not compete with other projects for available funds. This change will increase the share of projects subject to competitive review potentially cutting assistance to individuals and families currently being housed through PH-RRH and PH-PSH projects.

Increases CoC Bonus Project Funding  

This NOFO allows CoCs to use up to 15% (previously 5%) of their Final Pro Rata Need (FPRN) to create one or more new bonus project applications. In addition, HUD has created new minimum and maximum CoC Bonus amounts based on CoC type (Split CoC, Merged CoC, Unchanged CoC, and New Tribal CoC).

Includes TH Eligibility for Domestic Violence Bonus Projects

Transitional Housing will now be an eligible domestic violence (DV) bonus project. This was not included in previous NOFOs.

Implements HQS and NSPIRE Standards Requiring a Bathroom and Kitchen in Units

Under the CoC Interim Rule (24 CFR 578.75), housing leased with or rental assistance payments made with CoC program funds, must meet standards requiring a bathroom and kitchen in CoC funded units. The Department will consider requests to waive the requirement for projects proposing a housing model that does not meet this standard, such as Single Rooms Occupancy units (SROs).

Changing Reallocation Requirements

According to the NOFO, CoCs may reallocate funding from any eligible renewal grant, including grants that have not previously renewed under the CoC Program, so long as the project has an executed grant agreement with an expiration date in Calendar Year 2027.

Repurposing of YHDP Renewal Funds

CoCs that determine they no longer have an identified need for YHDP renewal funds shall notify HUD, and HUD shall recapture the YHDP renewal funding to make the amounts competitively available for a subsequent YHDP and Youth Homelessness System Improvement grant NOFO Competition.

Establishes Preferences for the Elderly and People with Disabilities

CoCs may establish preferences for the elderly (people 55 and older) and people with disabilities as defined by section 401(10) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11360(10)).

As required by Congress in the Consolidated Appropriations Act, 2026, HUD will announce FY 2026 CoC awards no later than December 1, 2026.