Three major sources of support for local down payment assistance and homebuyer education programs—Community Development Block Grants, the HOME Investments Partnerships Program and NeighborWorks America—would be eliminated under the Trump Administration’s proposed FY 2018 budget released March 16.

Also, under a revised FY 2017 budget proposal announced March 28, the Administration seeks to cut funding by half this year for Community Development Block Grants, reducing its finding by $1.5 billion. Congress faces an April 28 deadline to pass a spending plan for the rest of the fiscal year, which ends Sept. 30.

The reductions in the FY 2017 budget would partially offset a $30 billion increase Trump has requested for defense and border security. Congress is expected to vote on the FY 2017 budget during the week of April 24, after returning from Easter Recess.

The Administration’s FY 2018 budget would also defund NeighborWorks America, a congressionally-chartered nonprofit organization that supports community development in the United States and Puerto Rico and provides access to homeownership and to safe and affordable rental housing.

Though congressional leaders like Senator Lindsey Graham (R-SC) proclaimed the Trump budget “dead on arrival,” the proposed cuts are the most serious challenges to date to federal support for low-income homeownership assistance programs.

Community Development Block Grants are annual grants to localities and states to assist in the development of viable communities by providing decent housing, a suitable living environment; and expanded economic opportunities to low- and moderate-income residents. Eligible activities include homeownership assistance.

CDBG funds can be used for down payment assistance up to 50 percent of the lender required down payment amount. The HOME Investment Partnerships Program (HOME) provides formula grants to states and localities that communities use—often in partnership with local nonprofit groups—to fund a wide range of activities to create affordable housing for low-income households. HOME funds may be used to provide home purchase or rehabilitation financing assistance to eligible homeowners and new homebuyers.

From the April issue of the Down Payment Report.