Washington D.C., 2025-11-15 – The Trump administration is set to enact a sweeping policy change that will significantly reshape federal aid for homeless populations, redirecting over half of the 2026 funding for key housing programs from permanent supportive housing to transitional housing models. The new policy, first reported by Politico, introduces stringent work and service requirements for individuals in these transitional programs, a departure from the long-standing "Housing First" approach.

The move marks a substantial shift in the federal strategy to combat homelessness, prioritizing short-term, conditional shelter over immediate, stable housing solutions. Advocates for the homeless have swiftly voiced concerns, warning that the changes could exacerbate the crisis, particularly for vulnerable groups such as the elderly, disabled, and those with chronic health conditions.

Policy Shift Details and Funding Redirection

According to the Politico report published November 13, the upcoming grant cycle application for the Department of Housing and Urban Development's (HUD) Continuum of Care (CoC) program, expected to open in the coming weeks, will reflect these new directives. The application window is slated to close on January 23, 2026, just a week before Congress is mandated to finalize HUD's overall funding levels for the fiscal year.

The core of the policy change involves reallocating more than 50% of the CoC program's 2026 budget – potentially hundreds of millions of dollars – away from permanent supportive housing (PSH). PSH programs provide long-term rental assistance and supportive services to individuals experiencing chronic homelessness, often without preconditions like sobriety or employment. This approach, known as "Housing First," has been endorsed by previous administrations and widely supported by research as an effective method for reducing chronic homelessness.

In its place, funding will be channeled into transitional housing initiatives. These programs typically offer temporary shelter for up to 24 months and are often contingent on participants actively engaging in work, job training, or other service requirements. The administration's rationale appears to center on promoting self-sufficiency and accountability among recipients.

Impact on Vulnerable Populations

The potential impact of this policy shift on homeless individuals and families is a primary concern for advocacy groups. Critics argue that requiring work or service from individuals struggling with homelessness, many of whom face significant barriers such as mental illness, physical disabilities, or substance use disorders, could prove counterproductive. They contend that stable housing is often a prerequisite for addressing these underlying issues and gaining employment.

"This is not just a bureaucratic change; it's a fundamental redefinition of how we support our most vulnerable citizens," stated Maria Rodriguez, CEO of the National Coalition for the Homeless. "Permanent housing offers the stability needed for people to heal, connect with services, and rebuild their lives. Forcing people into short-term, conditional housing often creates new barriers and can cycle them back to the streets."

The "Housing First" model, pioneered in the 1990s, gained bipartisan support due to evidence showing its effectiveness in reducing street homelessness and proving more cost-efficient in the long run by decreasing emergency room visits, hospitalizations, and interactions with the justice system. The proposed policy change represents a significant philosophical pivot away from this evidence-based approach.

Timeline and Congressional Scrutiny

The timing of the grant application opening and its closure on January 23, 2026, adds another layer of complexity. With Congress facing a January 31 deadline to determine HUD's appropriations for the upcoming fiscal year, the administration's new policy guidelines will likely face intense scrutiny on Capitol Hill. Democratic lawmakers and some moderate Republicans are expected to challenge the redirection of funds, potentially setting up a legislative battle over the future of federal homelessness initiatives.

The shift is expected to create uncertainty for thousands of organizations nationwide that rely on CoC funding to operate their housing and support programs. Many existing permanent supportive housing projects could see their funding drastically reduced or eliminated, forcing them to either adapt to the new transitional model or scale back services.

The coming weeks will reveal the full scope of the administration's detailed requirements and the initial reactions from the wide array of stakeholders involved in addressing homelessness across the United States.