The Fall 2025 Government Shutdown’s Impact on Affordable Housing Programs

Hello! My name is Kaitlyn Hood and I am the co-lead for the Housing Insecurity Center. I am a third year student studying International Affairs and Economics! In this post, I will talk about how Georgians– and more specifically, Athenians– managed the fall 2025 government shutdown’s impact on affordable housing programs as well as how an Affordable Housing Fund could help alleviate some of the challenges posed by losing federal support.

“Every extra day that a shutdown goes on, you start to see more and more impact across the affordable housing space,” says Rebecca Simon, a D.C.-based Affordable Housing Lawyer at the Nixon Peabody law firm.

The first question that needs to be answered is: how did the government shutdown in October and November impact affordable housing programs? On a federal level, the government shutdown directly affected many systems and arrangements. The Department of Agriculture could not continue most rural development programs without appropriation. Moreover, while Section 521 Rental Assistance Program payments from obligations before the lapse would continue, no new rural housing loans, grants or loan guarantees would be committed during the shutdown. The government shutdown also lagged economic data assessments on items such as monthly job reports, housing starts, and new home sales. Future reports, consequently, may take some time to get rolling again. The Small Business Administration would not initiate new loan guarantees during the shutdown. The Internal Revenue Service had to cut its workforce by 50% during the shutdown, resulting in some major delays for mortgage application approvals, as some home buyers are required to file IRS form 4506-T in order to verify their income and Social Security number. 

More on HUD

The U.S. Department of Housing and Urban Development (HUD) felt a lapse in federal funding during the shutdown, and cut a significant portion of their staff, too. Prior to the shutdown, HUD’s workforce had been reduced a total of 23% since January of this year. During the shutdown, loans for affordable housing were stalled and community development block grants (CSBG) were paused. Along with Fair Housing and Equal Opportunity employees being terminated, the President of the HUD Council 222 says “It’s been extremely stressful, chaotic. These shutdowns create a lot of anxiety for a lot of my constituents.” Over 9 million Americans live in subsidized housing, receiving critical assistance from federal affordable housing programs under HUD. While the department would continue to make previously obligated Project Rental Assistance Contracts (PRAC) and Project-Based Rental Assistance payments during the shutdown, Section 202 properties whose contracts are expiring soon could face funding gaps. Moreover, all HUD fair housing enforcement activities ceased during the shutdown, so contacting the department was incredibly difficult. HUD could only close multifamily loans whose Firm approval letters were issued previous to the shutdown. The lack of staff, funding, and general operations during the shutdown also left HUD delayed in processing new Section 8 waiver requests. 

Georgia’s Experience

In Georgia, over 135,000 residents use rental assistance to afford housing. 68% are seniors, children, or people with disabilities. However, 4 in 10 low-income Georgians are experiencing homelessness or pay half of their income for rent. This means that many do not receive federal rental assistance due to limited funding. Limited resources in rural areas cause an incredible amount of stress on the local government and other local agencies. The shutdown exacerbated the amount of stress for many non-profits, affordable housing and community development departments, and the tens of thousands of Georgians who need rental assistance. Landlords and tenants alike bear the stress of the shutdown. The shutdown may disrupt full Housing Assistance Payments (HAP) to any landlords within the counties served by the Georgia Department of Community Affairs’s Housing Choice Voucher Program. For the rest of November, the DCA expects at best to make partial, prorated payments to landlords affected by the shutdown. The tenants within those homes fear the erosion of those services that keep their lights on, food on the table, and their children in school. Over 15 early childhood education centers under Head Start closed during the shutdown, jeopardizing the thousands of low-income parents who need to go to work but do not have a safe space to send their children. With many Community Service Block Grants limited during the shutdown, local communities lacked the financial flexibility to adapt to these intense challenges, especially rural Georgia. 

How Athens Faced the Government Shutdown

In addition to the School District’s involvement with the Head Start program, Athens Clarke County (ACC) also receives federal grants for affordable housing initiatives, like the Community Development Block Grant and the HOME Investment Partnership Program. They receive about $1.7 million annually from federal aid. While it sounds like a lot of money, in housing assistance, this amount does not go very far. ACC is also not within close proximity to other cities that support affordable housing organizations with strong capacity outside of Atlanta. Athens has a low homeownership rate at 46% due to an array of factors, including increasing rental practices, inequitable access to mortgage financing for Black households, and population growth. Currently, 40% of renter households spend more than 30% of their pre-tax income on rent, meaning that 40% of renter households are financially burdened. About 3% of Athenians rely on Section 8 housing vouchers to pay for their housing, but the need is greater than this. There are a limited number of developments in the county that accept these vouchers, creating a housing volatility crisis in Athens. For all of these reasons, many of the county’s residents faced October and November with fear and uncertainty, as a lag in funding could easily jeopardize their situations– with some having already lived in instability prior to the shutdown. 

Assistant Director of the ACC Unified Government’s Housing and Community Development Department, Alejandra Calva, spoke on how the mediator agency between HUD and local non-profits handled the government shutdown. Her team is responsible for administering the federal grants that are used to develop and preserve affordable housing and homelessness agencies. She mentions how Community Development Block Grants and HOME funds are on a reimbursement basis, and many of the local agencies have annual grant contracts, so they thankfully have some resources to keep cycling local funds. With the funding for FY26 already being awarded to them, they luckily weren’t too affected when it came to receiving federal grants. However, she notes that the local government was not able to get reimbursed during the shutdown, and they’re just not processing them after the fact. She mentions how “local nonprofits felt like they were waiting and hoping the shutdown wouldn’t last long. Everyone was just being cautious and operating one day at a time,” causing there to be “a lot more pressure for the local government to step in” during this time. While Athens could handle the financial lag, a loss of federal reimbursement could create a more tenuous situation in rural areas. Would they have any extra resources or funding to help cover their population’s needs? Could they step in to help with Head Start centers closing, to help with other crucial grants being cut or delayed? Lastly, Ms. Calva notes how local non-profits and agencies that rely on SNAP funding or work with the homeless population probably got hit by the government shutdown a lot worse, as they simply don’t have the extra cash to help their population. 

Departments closing, approval processes lagging, data reports stopping, and funding being shortened all contributed to how terrifying October and November has been for many non-profits, local governments, and their residents. 

The recent government shutdown proved that local governments and Georgia as a state cannot finance an adequate amount of affordable housing projects simply through federal funding. Ultimately, the government shutdown has highlighted how crucial it is for local governments and partnering agencies to have an Affordable Housing Fund. The establishment of local affordable housing funds could reduce the reliance on federal aid and increase affordable housing projects tenfold. This would be an incredibly powerful tool for encouraging long-term support for affordable housing. They provide locally sourced and managed dollars towards a range of local housing priorities, all targeted to meet local housing needs. The fund could attract developers to make affordable housing by allowing them to take out loans to fill in construction cost gaps. An Affordable Housing Fund could finance a range of programs that support key issues such as rental affordability, homeownership, or addressing homelessness.