How Much Does the Federal Government Spend on Housing Support?
Housing costs are often a household’s largest expense, and therefore a primary driver of affordability for millions of American families. The federal government subsidizes the cost of housing for eligible Americans both through tax expenditures — often called tax breaks — as well as through direct spending programs, which are mostly administered by the Department of Housing and Urban Development (HUD). While a relatively small part of the federal budget, housing subsidies keep millions of people out of poverty each year.
Federal Spending Programs on Housing
Direct federal spending on housing assistance totaled $78 billion in 2025, representing slightly more than 1 percent of total federal spending. Approximately 80 percent of the federal government’s support for housing flows through three programs that provide rental assistance to low-income households:
- Tenant-based rental assistance ($38 billion): Low-income households receive a voucher that allows them to choose housing in the private market while paying 30 percent of their income toward rent. The voucher, administered by local public housing authorities (PHAs), covers the remainder of the rent.
- Project-based rental assistance ($17 billion): HUD contracts with property owners who agree to rent their units to low-income households. Households pay 30 percent of their income toward rent and HUD makes up the difference. HUD has allowed such contracts to expire gradually over time and has been switching households to tenant-based assistance.
- Public housing ($9 billion): PHAs own and operate housing units and rent them directly to low-income households, who pay 30 percent of their income. HUD provides regulatory oversight and allocates funding to PHAs to support operating costs and capital improvements.
In addition to the three programs above, the federal government spent $8 billion in 2025 on other programs targeted to specific populations, including the elderly, people with disabilities, rural populations, people experiencing homelessness, persons with AIDS, and Native Americans.
Direct spending on housing increased 27 percent in real, inflation-adjusted terms over the last 20 years, from $61 billion in 2006 to $78 billion in 2025. Most of that increase is attributable to tenant- and project-based rental assistance, which grew by $9.3 billion (32 percent) and $8.6 billion (100 percent), respectively. Spending on public housing fell by $2.3 billion (19 percent).
Who Is Eligible For Housing Assistance?
To qualify for direct spending programs, households must have income below certain levels: 50 percent of the local median income for tenant-based assistance and 80 percent of the local median income for project-based assistance and public housing. Under all three programs, a certain amount of support is reserved for extremely low-income households, which are defined as those earning less than 30 percent of the local median income. However, rental assistance is not an entitlement program, meaning that meeting the eligibility requirements does not guarantee that a household will receive benefits.
Who Receives Housing Assistance from the Federal Government?
A total of 4.5 million households received support through HUD housing assistance programs in 2025:
- Tenant-based assistance served 2.0 million
- Project-based assistance served 1.6 million
- Public housing served 0.8 million
Households receiving HUD housing assistance are low income, with an average household income of $18,483 in 2025. HUD classifies 99 percent of households receiving assistance as “low income” and 79 percent as “extremely low income” relative to the local area median family income. HUD-assisted households are also mostly headed by women (74 percent). By comparison, 30 percent of all households were headed by women in 2023, according to the U.S. Census. Single-woman householders with at least one child under age 6 make up 11 percent of HUD-assisted households. A significant share of HUD-assisted households also has at least one member with a disability (43 percent). Two-thirds of HUD-assisted households are headed by individuals who identify as a racial or ethnic minority.
Households receiving HUD assistance are concentrated in the South, Northeast, and Appalachia. The top three counties with the highest proportion of residents in households receiving HUD assistance include Norton City, VA (17 percent); Woodruff County, AR (16 percent); and Pemiscot County, MO (15 percent).
Housing-Related Tax Expenditures Are Larger Than Housing Spending Programs
The federal government provides support for housing through two major categories:
- Tax expenditures ($119 billion); and
- Direct spending ($78 billion).
Most federal expenditures on housing are delivered through targeted tax expenditures, which operate by reducing a taxpayer’s taxable income or income tax liability by an amount related to housing expenses and thereby decrease federal income tax revenues. The largest housing-related tax break in 2025 was the exclusion of capital gains on sales of principal residences, which resulted in $50 billion in foregone revenues. The next largest housing-related tax expenditure is the mortgage interest deduction — one of the largest individual income tax deductions — which resulted in $46 billion in foregone revenue in 2025.
How Affordable Does the Federal Government Make Housing?
The U.S. Census Bureau estimates that housing subsidies lifted 2.1 million people out of poverty in 2024. The average HUD-assisted household in 2025 contributed $452 per month toward rent and utilities and received a subsidy of $1,135. However, the average income of HUD-assisted households was just $18,483, meaning they still spend approximately 29 percent of their total income on rent and utilities. Further, only 3 percent of those households received most of their after-taxes-and-transfers income through cash assistance programs.
By comparison, taxpayers who claimed the mortgage interest deduction in 2025 received an average tax reduction of $2,961, according to the Joint Committee on Taxation. That is 1.6 times larger than the average HUD subsidy. Most taxpayers who claim the mortgage interest deduction have incomes above $200,000.
How Did the 21st Century ROAD to Housing Act Change Federal Supports for Housing?
In July 2026, lawmakers enacted the 21st Century ROAD to Housing Act, which significantly changed federal housing development and financing policies in an effort to make housing more affordable for Americans. Key features of the legislation include:
- creating new pilot programs through HUD designed to make housing more accessible,
- encouraging the construction of new housing,
- reforming housing financing,
- supporting veterans’ housing, and
- limiting corporate ownership of single-family homes.
Notably, the Congressional Budget Office scored the legislation as budget neutral, proving that Congress can enact fiscally responsible policies that address household affordability.
Conclusion
Funding for housing represents a relatively small part of the annual budget and serves some of the most economically vulnerable Americans. Unlike other parts of the safety net, funding for major housing programs is not set in permanent law and is therefore subject to change annually through the appropriations process. That fact requires lawmakers to consistently weigh the merits of such programs against other budgetary priorities, as well as our growing national debt.
Image credit: Photo by Getty Images
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