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Analysis: Trump 2026 Budget Slashes Rural Housing and Other Programs [1]

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Date: 2025-05-06

President Trump’s proposed fiscal 2026 federal budget outline, released on May 2, proposes deep cuts and many outright eliminations for housing and other programs serving rural America.

If adopted by Congress, key U.S. Department of Agriculture rural development and housing programs would be completely eliminated. Major Housing and Urban Development programs that are important in rural areas also would get zero dollars next year, and many social safety net programs would be cut.

In the first Trump term, Congress on a bipartisan basis rejected similar cuts. Whether that will hold this year may be in doubt.

The OMB statement says, “Savings come from eliminating radical diversity, equity, and inclusion (DEI) and critical race theory programs, Green New Scam funding, large swaths of the Federal Government weaponized against the American people, and moving programs that are better suited for States and localities to provide.”

The document released on May 2 is a “skinny” budget – an outline of the final full budget proposal. It states that the Department of Defense would get an increase of $113 billion.

First maybe some good and interesting news: The proposed budget says that it “furthers investment in rural communities by creating a new $100 million award program that would provide access to affordable financing and spur economic development in rural America. This new program would require 60% of Community Development Financial Institutions’ (CDFIs’) loans and investments to go to rural areas.”

USDA Programs

Key USDA housing programs that would receive zero 2026 funding under the Trump budget include USDA Sec. 502 direct home loans for low-income borrowers and the 60-year-old self-help housing program.

Turning to USDA Rural Development, the document says that the “Budget would also eliminate programs that are duplicative, too small to have macro-economic impact, costly to deliver, in limited demand, available through the private sector, or conceived as temporary. These include rural business programs, single family housing direct loans, self-help housing grants, telecommunications loans, and rural housing vouchers. Rural Development salaries and expenses are reduced commensurately.”

Hmmm. Well, the 502 loan program dates from 1950 and is one of the federal government’s oldest housing programs for low-income people. It is also a loan program that is repaid to the government. The Sec. 502 direct program between 1950 and 2020 has provided loans to allow 2.2 million low-income rural families to become homeowners. Most of those families would not have become homeowners with that program.

USDA self-help housing is a unique sweat equity program in which groups of families work together to build their own homes.

HUD Programs

Despite its name, the U.S. Department of Housing and Urban Development is a vital source of funding for rural areas and suburbs as well as cities. The Trump 2026 budget would provide zero funds for Community Development Block Grants and the HOME program, cutting $3.3 billion from CDBG and $1.2 billion from HOME. Both programs are among HUD’s most important initiatives and are used extensively in rural areas and small cities. But the bigger shocker is that one of the federal government’s most important and largest social safety net programs, tenant-based rental assistance, would be cut by $26.7 billion. A number of HUD programs would be consolidated into a new initiative of State Rental Assistance Block Grants. The National Low-Income Housing Coalition estimates that this will result in a 43% cut in rental assistance..

Other Cuts

The Low-Income Home Energy Assistance Program (LIHEAP) at the Department of Health and Human Services would be eliminated. The budget document says that energy support for low-income households can be achieved through “energy dominance, lower prices, and an America First economic platform.”

The Community Development Financial Institutions Fund’s discretionary grants would end. The budget language says these awards “were abused to serve a partisan agenda.” This Treasury program supports urban and rural nonprofit loan funds.

The $770 million Community Services Block Grant program would be eliminated. It has funded many rural Community Action Agencies since the 1960s.

$624 million in funding for the Commerce Department’s Economic Development Administration and Minority Business Development Agency would be eliminated.

At the Interior Department, the proposed budget supports the Indian Health Service, the Bureau of Indian Affairs, and the Bureau of Indian Education. But the proposal “also weeds out radical woke grants and programs and streamlines other programs for tribal communities that were ineffective.”

What Will Congress Do?

Congress in the annual appropriations process acts on a President’s proposed budget. Theoretically a 2026 federal budget should be completed by October 1, 2025. House Speaker Mike Johnson sounds all in:

“President Trump’s proposed budget is a bold blueprint…. [It] makes clear that fiscal discipline is non-negotiable. President Trump’s plan ensures every federal taxpayer dollar spent is used to serve the American people, not a bloated bureaucracy or partisan pet projects.”

The next steps will be House and Senate hearings on the proposals.

Joe Belden is a writer and consultant based in Washington, D.C.

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[1] Url: https://dailyyonder.com/analysis-trump-2026-budget-slashes-rural-housing-and-other-programs/2025/05/06/

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