HOME Investment Partnerships Program 2026: How HUD Block Grants Fund Homeownership Assistance

The HOME Investment Partnerships Program (HOME) is a HUD block grant program that funds states, cities, and counties to create and preserve affordable housing. It is one of the largest federal affordable housing programs by dollar volume. For MLOs, HOME is important because it is a frequent funding source for the DPA programs that borrowers bring to the table at closing.

How HOME Funds Flow

HUD allocates HOME funds to participating jurisdictions (PJs): states, cities, urban counties, and consortia. The PJ designs the local homeownership program and disburses funds as grants, forgivable loans, or soft second mortgages. When a borrower mentions DPA from their city's housing program, there is a good chance that program is funded by HOME. The PJ, not HUD, sets the specific terms.

• ✦HOME-funded DPA is typically a forgivable loan or grant
• ✦Recapture provisions vary: some programs recapture a prorated amount if the borrower sells within 5-10 years
• ✦Resale restrictions: some HOME-funded programs require the property to remain affordable if resold
• ✦Income limits: HOME has a regulatory maximum of 80% AMI for homebuyers
• ✦Match requirement: PJs must match 25% of HOME funds with non-federal sources

Stacking HOME Funds with Agency Loans

HOME-funded DPA is routinely stacked with FHA, USDA, and conventional loans. The HOME second lien must be subordinated behind the first mortgage. Most agency programs accept HOME as a subordinate soft second. Confirm that the specific PJ program permits stacking with the first lien product you are placing. Some local programs restrict stacking to FHA only.

Recapture vs. Resale Restrictions

This distinction matters for borrower exit planning. A recapture provision means the borrower repays a portion of the HOME funds if they sell within the affordability period. A resale restriction means the property must be sold to another income-qualified buyer at a restricted price. Resale restrictions reduce the borrower's equity appreciation. Flag this to borrowers before closing.