By Pearlzz LLC
Updated: August 2026
UPDATE (August 2026): UPDATE — August 11, 2026: On August 7, U.S. District Judge Mary S. McElroy set aside HUD’s FY 2026 CoC NOFO in its entirety, ruling that HUD failed to complete the notice-and-comment process required before implementing the funding changes. The ruling means the June 2026 NOFO cannot proceed in its current form. HUD may still appeal, seek further relief, or issue a revised NOFO after following the required process. As of August 11, HUD’s website still displays the FY 2026 competition and August 26 application deadline, so applicants should monitor HUD for updated official guidance.
If you operate Transitional Housing—or are thinking about opening a program in 2026—there is something you need to understand:
The funding landscape has changed.
HUD’s FY 2026 Continuum of Care (CoC) competition makes more than $4 billion in competitive homelessness funding available, with applications due August 26, 2026. HUD has also announced a major shift toward Transitional Housing and supportive-service projects.
That creates real opportunity.
But it does not mean:
Get a house. Put beds in it. Register somewhere. Wait for government referrals.
And it certainly does not mean every organization currently receiving homelessness funding will continue operating exactly as it has.
The FY 2026 NOFO changes both sides of the equation:
New programs may have opportunities that did not exist before. Existing programs may face competition they were not accustomed to facing.
That distinction is important.
What Changed in the FY 2026 CoC NOFO?
HUD announced $4.04 billion for the FY 2026 Continuum of Care competition.
Of particular importance, HUD says approximately $1.3 billion is available for new projects, with priority placed on Transitional Housing and supportive-service projects.
That represents a significant policy shift.
HUD had previously announced that it intended to rebalance CoC funding toward a broader range of homelessness interventions, including:
- Transitional Housing
- Supportive Services Only projects
- treatment and recovery services
- employment and job training
- other services intended to improve self-sufficiency
For TH operators, this deserves attention.
But more emphasis on Transitional Housing does not mean easier money.
In fact, HUD describes FY 2026 as the most competitive funding opportunity in the history of the CoC program.
More TH Funding Does Not Mean Every Current TH Operator Survives
This may be one of the most important things existing providers need to understand.
Historically, many organizations became accustomed to CoC projects being renewed year after year.
HUD is explicitly signaling that it wants CoCs to evaluate outcomes and prioritize stronger-performing projects rather than treating renewal as automatic. Funding is being tied more closely to performance and competition.
That means an organization should not assume that because it received funding previously, it will continue receiving the same funding indefinitely.
Some existing programs could:
- lose funding;
- receive reduced funding;
- be reallocated;
- face stronger competition from new projects;
- need to redesign parts of their program;
- or need to demonstrate stronger outcomes to remain competitive.
We should also be careful not to claim that particular programs are definitely closing. The FY 2026 competition is still underway, and final awards have not been made. The application deadline is August 26, 2026.
But the direction is unmistakable:
2026 is not business as usual.
At the Same Time, New Transitional Housing Projects Have an Opportunity
There is another side to this change.
Operators who have spent years hearing that federal homelessness policy was moving away from Transitional Housing should pay attention.
HUD is now expressly prioritizing TH and supportive-service approaches within substantial portions of the new-project funding.
That can create opportunities for properly structured organizations.
The important words are:
properly structured.
A bedroom is not a Transitional Housing program.
A leased house is not a CoC project.
And housing somebody who is experiencing homelessness does not automatically make the housing operator eligible for federal homelessness funding.
Having Beds Does Not Make You a Government-Funded TH Provider
This is where social-media discussions about housing funding can become dangerous.
You may hear:
“The government needs housing.”
That can be true.
You may hear:
“There is billions of dollars available.”
Also true.
But this conclusion does not automatically follow:
“Therefore, if I have a house, the government will pay me to fill it.”
HUD’s CoC program funds defined projects through an established funding structure.
Eligible project applicants generally include nonprofit organizations, state and local governments, public housing agencies, tribes and certain public entities. Project applications normally operate through the local Continuum of Care’s competitive process.
CoC funding can support several different components, including:
Permanent Housing, Transitional Housing, Supportive Services Only, HMIS and certain homelessness-prevention activities.
These are different program components—not interchangeable names for someone who has vacant rooms.
True Transitional Housing Has a Transitional Purpose
This distinction matters more in 2026, not less.
A legitimate TH program is not merely:
room + rent + house rules.
There must be an actual transition structure around the housing.
Depending upon the program and population, that can involve things such as:
- housing stabilization;
- service coordination;
- employment assistance;
- benefits navigation;
- behavioral-health connections;
- recovery supports;
- transportation coordination;
- referrals;
- life-skills development;
- reentry coordination;
- healthcare connections;
- and planning toward permanent housing and greater stability.
That does not mean the housing operator personally has to provide every professional service.
Outside agencies, licensed providers, community partners and other organizations may perform appropriate functions.
The important point is that TH has a programmatic purpose beyond renting a bed.
CoC, HMIS, Grants and Referrals Are Not the Same Thing
Another common source of confusion is treating several government systems as if they were one pathway.
They are not.
CoC is the community-wide homelessness planning and funding structure.
HMIS is the Homeless Management Information System used for client-level homelessness data and coordination.
A grant award is funding awarded under specific eligibility and program requirements.
A referral relationship means another organization may refer an eligible person to your program.
A government contract is another legal relationship altogether.
Registering for one does not automatically give you the others.
Likewise:
SAM.gov registration does not equal a federal grant.
Vendor registration does not equal a government contract.
HMIS participation does not guarantee referrals.
And having beds does not guarantee reimbursement.
That is why operators should understand the exact pathway before spending thousands of dollars opening a facility.
Veteran Housing Has Separate Pathways Too
This becomes even more important when Veterans are involved.
Programs such as:
SSVF, GPD, HUD-VASH and HCHV
are not different names for the same Veteran-housing funding pool.
They have different purposes, eligibility requirements, payment structures and relationships with VA and HUD.
A landlord accepting a HUD-VASH tenant is not automatically a GPD provider.
A house receiving referrals involving an SSVF participant is not automatically an SSVF grantee.
And owning housing for Veterans does not automatically create a VA contract.
We will address those Veteran-housing pathways separately because operators need to understand each one before making financial decisions.
What Should TH Operators Do Now?
The first move should not be rushing out to lease another house because somebody said $4 billion is available.
Start with the program.
Know:
Who are you serving?
Why are they entering Transitional Housing?
What is the transition objective?
Which services will your organization provide?
Which services will outside agencies provide?
What documentation will demonstrate participation, progress and outcomes?
Which funding pathway actually applies to your organization?
Who is eligible to apply?
What does your local CoC require?
What outcomes will you be expected to demonstrate?
Those questions should come before furniture, beds and marketing.
The Bottom Line
The FY 2026 CoC NOFO creates something the housing sector has not seen in quite the same form for years:
greater federal emphasis on Transitional Housing combined with greater competition for homelessness funding.
That means opportunity and disruption can happen at the same time.
Some established organizations may find themselves competing harder to retain funding.
Some new organizations may find openings that previously did not exist.
But the organizations best positioned for either situation will not simply be the ones with buildings.
They will be the ones that can demonstrate:
a clearly defined program, appropriate services, sound documentation, qualified partnerships, measurable outcomes and an actual understanding of the funding pathway they are pursuing.
Before paying anyone to teach you how to “get government money” for housing, learn the structure first.
A house is an asset.
A program is an operating system.
A funding source is a separate pathway.
Knowing the difference may save you from an expensive about-face later.
Sources and current status
FY 2026 CoC competition remains open as of August 2026, with the application deadline set for August 26, 2026 at 8:00 p.m. Eastern Time. HUD also modified the https://www.hud.gov/hud-partners/grants-info-funding-opps NOFO on July 24, 2026 to provide a direct-to-HUD application process in certain geographic areas where HUD determines the local CoC does not meet program requirements.
