The U.S. Department of Housing and Urban Development (HUD) has issued a final rule extending the mandatory compliance deadline for provisions of the Housing Opportunity Through Modernization Act of 2016 (HOTMA) as they apply to Community Planning and Development (CPD) programs.
Scheduled for publication in the Federal Register on December 30, 2025, the rule establishes a new mandatory compliance date of January 1, 2027.
CPD Programs Covered by the Extension
The extended compliance deadline applies to a broad range of HUD CPD programs, including:
- HOME Investment Partnerships Program (HOME)
- HOME-ARP
- Housing Trust Fund (HTF)
- Housing Opportunities for Persons With AIDS (HOPWA)
- Community Development Block Grant (CDBG)
- Emergency Solutions Grants (ESG)
- Continuum of Care (CoC)
- Other CPD programs funded through competitive processes
Grantees and project owners participating in these programs will now have additional time to prepare for full HOTMA implementation.
Why HUD Extended the HOTMA Deadline Again
HUD cited ongoing delays in completing complex system updates required to support HOTMA implementation across CPD programs. These system changes are necessary to ensure accurate income determinations, compliance tracking, and reporting.
HUD also acknowledged that grantees need sufficient time after system updates and final guidance are released to:
- Revise local policies and procedures
- Update internal and third-party software systems
- Train staff and partners on new HOTMA requirements
This marks the third extension of the CPD HOTMA compliance deadline since the final rule was published in February 2023. The prior mandatory compliance date was January 1, 2026.
What CPD Grantees Can Do During the Extension Period
During the extension period, CPD grantees may continue to establish their own HOTMA implementation dates, provided that:
- The chosen implementation date is no earlier than January 1, 2024, and
- Full compliance is achieved no later than January 1, 2027
Optional HOTMA Provisions During the Extension
HUD is allowing CPD grantees flexibility during this period. Grantees may choose whether to:
- Implement applicable income safe harbors under 24 CFR 5.609(c)(3); and
- For HOME Participating Jurisdictions, implement the expanded income safe harbors and flexibilitiesestablished under 24 CFR 92.203 by the 2025 HOME final rule without implementing the remaining HOTMA-related regulatory changes.
Federally Mandated Income Exclusions Still Required
HUD emphasized that Federally Mandated Exclusions from Income, published on January 31, 2024 (FR-6410-N-01), must continue to be applied when making income determinations.
This requirement applies regardless of whether a grantee has implemented the HOTMA final rule.
Preparing Now for the January 1, 2027 Deadline
While the extended deadline provides valuable additional time, HUD cautions that it should not be viewed as a pause on HOTMA preparation. CPD grantees and project owners are strongly encouraged to use this period strategically to:
- Assess program-specific impacts of HOTMA
- Update policies, procedures, and forms
- Coordinate compliance across layered funding sources
- Plan staff training and technical assistance
- Prepare for system and software changes
Taking proactive steps now will help ensure a smoother transition and reduce implementation risks ahead of the January 1, 2027 HOTMA compliance deadline.
