HOME Investment Partnerships Program: Uses, Limits, and Deadlines

The HOME Investment Partnerships Program rules sit in 24 CFR Part 92 and cover five things a reader usually wants to pin down: who receives the federal money, what it can pay for, who can benefit, what rents and affordability terms apply to the resulting housing, and what deadlines, protections, and reviews attach to every dollar. The summary below works through each in the order most projects and applicants encounter them.

Who Receives HOME Funds

HUD distributes HOME funds by formula to state and local governments that qualify as Participating Jurisdictions. A Participating Jurisdiction can be a state or a unit of general local government, such as a city or county, that meets HUD’s threshold requirements.¹ Each jurisdiction deposits its annual allocation into a local HOME Investment Trust Fund and then commits it to specific projects.

At least 15 percent of every annual allocation must be reserved for projects owned, developed, or sponsored by Community Housing Development Organizations. A CHDO is a private nonprofit whose governing board is at least one-third low-income residents or their representatives, and that has a demonstrated track record of carrying out housing projects with federal funds.²

What HOME Money Can Pay For

HOME funds are limited to four core housing activities: acquisition of land or existing buildings for conversion to affordable housing; rehabilitation of deteriorating structures to meet code; new construction of affordable units; and tenant-based rental assistance covering monthly rent and security deposits in the private market.³

Within those categories, the funds cover hard costs like materials and labor, along with soft costs such as architectural fees, environmental assessments, and relocation expenses for displaced residents. A portion may also cover reasonable administrative and planning costs and CHDO operating expenses.

Prohibited Uses

HOME dollars cannot pay delinquent taxes or fees, fund project reserve accounts or operating subsidies (with narrow exceptions), provide matching contributions for other federal programs, or assist public housing capital projects.⁴ A project already assisted with HOME funds during its affordability period generally cannot receive additional HOME assistance, except for limited situations like tenant-based rental assistance or preserving homeownership affordability. A jurisdiction cannot use HOME money to buy property it already owns unless it acquired the property in anticipation of a HOME project.

Who Qualifies as a Beneficiary

Families in HOME-assisted housing, or receiving HOME rental assistance, must have annual incomes at or below 80 percent of the area median income, adjusted for household size. HUD publishes updated income limits each year for every metropolitan area.⁵

A stricter targeting rule sits on top of the 80 percent ceiling: at least 90 percent of families receiving tenant-based rental assistance or occupying HOME-assisted rental units must have incomes at or below 60 percent of area median income.⁶ Income is verified by examining at least two months of source documents such as wage statements, interest statements, and unemployment compensation records. The participating jurisdiction picks the income-calculation method and applies it consistently.

Rent Limits in HOME-Assisted Rentals

HOME-assisted rental units are subject to two tiers of rent caps, both published annually by HUD for every market area.⁷

The High HOME Rent is the ordinary cap for most HOME-assisted units. It equals the lesser of the area’s fair market rent for a comparable unit or 30 percent of the adjusted income of a family earning 65 percent of area median income. The Low HOME Rent is a tighter cap set at 30 percent of the adjusted income of a family earning 50 percent of area median income. In any rental project with five or more HOME-assisted units, at least 20 percent of those units must be rented at or below the Low HOME Rent to very low-income families.

If a sitting tenant’s income rises above the low-income threshold, the unit does not immediately lose its affordable status. The tenant’s rent adjusts to the lesser of 30 percent of the family’s adjusted income or the amount payable under state or local law, and the unit stays in compliance as long as the jurisdiction fills the next vacancy with an income-eligible household.⁸

How Long Affordability Must Last

Every HOME-assisted property must remain affordable for a minimum period after completion. The length depends on the activity and the per-unit HOME investment.

Rental Housing

For rehabilitation or acquisition of existing rental units:

Under $25,000 per unit: 5 years
$25,000 to $50,000 per unit: 10 years
Over $50,000 per unit, or any rehabilitation involving refinancing: 15 years
New construction or acquisition of newly constructed housing: 20 years, regardless of amount⁸

Homeownership Housing

For homebuyer assistance the tiers top out at 15 years:

Under $25,000 per unit: 5 years
$25,000 to $50,000 per unit: 10 years
Over $50,000 per unit: 15 years¹

Resale or Recapture on Homebuyer Resales

If a HOME-assisted homebuyer sells before the affordability period ends, the jurisdiction must enforce either a resale restriction or a recapture provision, chosen up front and written into the homebuyer agreement. Under resale, the next buyer must be income-eligible and use the home as a principal residence, and the seller must receive a fair return on investment. Under recapture, the jurisdiction recovers some or all of the original HOME assistance from the sale proceeds, and the recaptured amount can never exceed net proceeds (sale price minus other loan repayments and closing costs).⁹

Per-Unit Subsidy Caps

HUD caps the HOME investment in any single unit. The cap equals 240 percent of the base mortgage limit for condominiums under Section 234 of the National Housing Act. Current published limits by unit size are:¹⁰

Studio / 0-bedroom: $187,658
1-bedroom: $215,122
2-bedroom: $261,595
3-bedroom: $338,419
4-bedroom: $371,477

These are absolute ceilings. The subsidy layering review, described further down, independently checks whether the proposed HOME investment exceeds what the project actually needs.

Matching Funds

For every HOME dollar drawn, the Participating Jurisdiction must contribute at least 25 cents in non-federal match. Eligible match sources include local tax revenues, donated land, waived permit or impact fees, and below-market-rate financing on project loans.¹¹

A jurisdiction whose poverty rate exceeds 125 percent of the national average and whose per capita income falls below 75 percent of the national average is severely distressed and gets a full 100 percent match reduction. Meeting only one of those thresholds qualifies the jurisdiction as fiscally distressed and cuts the match in half. States use a similar framework that adds a personal income growth test as a third factor.

Commitment and Expenditure Deadlines

HUD recaptures HOME funds a jurisdiction fails to put to work on schedule:¹²

Funds from a fiscal year allocation that remain uncommitted 24 months after HUD executes the annual agreement are recaptured.
Funds committed to a state recipient or subrecipient that are not tied to a specific local project within 36 months are recaptured.
Funds not drawn from Treasury by September 30 of the fifth year after the fiscal year allocation are recaptured.

Missed deadlines mean lost money, and HUD may also assess penalties under 24 CFR 92.552 that further reduce a jurisdiction’s trust fund balance.

Tenant Protections

Tenants in HOME-assisted rental units receive a written lease of at least one year unless both tenant and owner agree to a shorter term. The lease cannot force tenants to waive a jury trial, agree to be sued without notice, accept responsibility for the owner’s negligence, or pay the owner’s legal fees regardless of outcome. An owner can only terminate a tenancy for serious or repeated lease violations, violations of law, or other good cause, and an increase in the tenant’s income is explicitly not good cause for termination or nonrenewal.¹³

Victims of domestic violence, dating violence, sexual assault, or stalking have additional protections under the Violence Against Women Act. A tenant cannot be evicted or denied assistance because of victim status, and incidents of abuse cannot be treated as lease violations by the victim. Every HOME-assisted property must maintain an emergency transfer plan that allows qualifying tenants to relocate quickly when facing an imminent threat of harm.¹⁴

Labor and Civil Rights Compliance

Construction contracts covering 12 or more HOME-assisted units trigger Davis-Bacon Act coverage, meaning all workers on the project must be paid at least the locally prevailing wage for their trade. Once triggered, the prevailing wage applies to the entire project, not just the HOME-assisted units, and splitting a project into multiple contracts to duck the 12-unit trigger is prohibited.¹⁵

Section 3 of the Housing and Urban Development Act of 1968 requires that employment and contracting opportunities generated by HOME-funded projects be directed, to the greatest extent feasible, toward low-income and very low-income residents. As of March 2026, Section 3 compliance is triggered for housing and community development projects receiving $300,000 or more in HUD financial assistance.¹⁶

Every jurisdiction must administer its HOME program consistent with Title VI of the Civil Rights Act, the Fair Housing Act, and related executive orders. For new rental construction, the jurisdiction must determine that the proposed site promotes greater housing choice rather than concentrating low-income housing in already-disadvantaged areas.¹⁷

Physical Inspection Standards

HOME-assisted rental properties must remain in good physical condition throughout the affordability period. The National Standards for the Physical Inspection of Real Estate (NSPIRE) replace the older Housing Quality Standards framework, with a compliance date of October 1, 2026, for HOME properties.¹⁸

Jurisdictions must inspect each assisted rental project on-site within 12 months of completion and at least once every three years thereafter. Projects with one to four units are inspected in full. Larger projects use statistical sampling, with required sample sizes scaling from 4 units (for projects of 5 to 20 units) up to 32 units (for projects of 921 units or more). Life-threatening health and safety deficiencies must be corrected immediately; non-life-threatening issues require a follow-up inspection within 12 months.

For projects receiving HOME commitments on or after April 20, 2026, hardwired smoke alarms are required on each level of every unit, near each sleeping area, in basements, and in common areas. A jurisdiction can grant an exception for battery-operated detectors with 10-year non-rechargeable batteries when hardwiring is physically infeasible or would create undue financial burden.

Displacement and Relocation

When a HOME-funded project displaces existing residents, the federal Uniform Relocation Act applies. The jurisdiction or developer must issue a General Information Notice as soon as feasible, informing residents that displacement may occur, describing the relocation payments they may qualify for, and explaining that advisory services will be provided.¹⁹

No resident can be required to move without at least 90 days’ advance written notice, and no one can be forced out until at least one comparable replacement dwelling has been identified and made available. Displaced tenants are entitled to payment of actual reasonable moving expenses. Tenants who occupied the original unit for at least 90 days before negotiations began may also receive a replacement housing payment of up to $9,570 for rental or down payment assistance. These costs are an eligible use of HOME funds.

How a Project Actually Gets Approved

There is no single national HOME application. Each Participating Jurisdiction designs its own forms, timelines, and selection criteria. Some issue annual competitive Notices of Funding Availability; others accept applications on a rolling basis. What is federally mandated is what the jurisdiction must verify before releasing money.

Income Documentation

For individual households applying for homebuyer assistance or moving into HOME-assisted rental housing, the jurisdiction must examine at least two months of source documents evidencing income.⁵

Developer Documentation

Developers proposing rental or homeownership projects typically provide property deeds or purchase agreements, detailed construction cost estimates, evidence of other committed funding sources, and a complete project budget and timeline. The goal is to show the project is financially viable and that HOME dollars fill a genuine funding gap.

Subsidy Layering Review

Before funds are awarded, the jurisdiction must conduct a subsidy layering review to confirm the project is not receiving more combined government assistance than it needs to be feasible. The review compares total development costs against all public funding sources to ensure HOME dollars are the minimum necessary to make the deal work.²⁰

Environmental Review

Federal law requires an environmental review before HOME funds can be committed. Tenant-based rental assistance and administrative costs fall into low-level categorical exclusions or exemptions. New construction, demolition, and major rehabilitation require a full Environmental Assessment. Exceptionally large projects affecting 2,500 or more units may need a complete Environmental Impact Statement.²¹

The Written Agreement

Once a project clears review, the jurisdiction and the developer sign a legally binding written agreement before any funds are disbursed. Federal regulations require a long list of provisions, including the project address and budget, the affordability period and enforcement mechanism (typically deed restrictions or covenants), initial rent levels and rent-increase procedures for rental projects, resale or recapture terms for homeownership projects, property maintenance standards, affirmative marketing obligations, VAWA compliance, and remedies for breach.²² The agreement also requires the developer to maintain records and submit annual reports on rents and occupancy for the full affordability period, and disbursement requests can only be made when funds are actually needed for eligible costs.

1
eCFR. 24 CFR Part 92 – HOME Investment Partnerships Program
2
eCFR. 24 CFR 92.2 – Definitions
3
eCFR. 24 CFR 92.205 – Eligible Activities
4
eCFR. 24 CFR 92.214 – Prohibited Activities and Fees
5
eCFR. 24 CFR 92.203 – Income Determinations
6
eCFR. 24 CFR 92.216 – Income Targeting
7
HUD Exchange. HOME Rent Limits
8
eCFR. 24 CFR 92.252 – Qualification as Affordable Housing: Rental Housing
9
HUD Exchange. What Are the Main Features of Recapture and Resale?
10
Federal Register. HOME Investment Partnerships Program – Maximum Per-Unit Subsidy Limit Methodology and Amount Notice
11
eCFR. 24 CFR Part 92 – Section 92.218 Amount of Matching Contribution
12
eCFR. 24 CFR 92.500 – The HOME Investment Trust Fund
13
eCFR. 24 CFR 92.253 – Tenant Protections
14
eCFR. 24 CFR 5.2005 – VAWA Protections
15
U.S. Department of Housing and Urban Development. Factors of Labor Standards Applicability
16
Federal Register. Section 3 Project Threshold Updates for Creating Economic Opportunities for Low- and Very Low-Income Persons and Eligible Businesses
17
eCFR. 24 CFR 92.202 – Site and Neighborhood Standards
18
Federal Register. National Standards for the Physical Inspection of Real Estate: Implementation Guidance and Inspection Standards for the HOME Investment Partnerships and Housing Trust Fund Programs
19
eCFR. 49 CFR Part 24 – Uniform Relocation Assistance and Real Property Acquisition for Federal and Federally Assisted Programs
20
Federal Register. Administrative Guidelines: Subsidy Layering Review for Project-Based Vouchers
21
HUD Exchange. What Are the Different Levels of Environmental Review?
22
GovInfo. 24 CFR 92.504 – Participating Jurisdiction Responsibilities