The Innovation Fund Act establishes a new competitive grant program, to be administered by the Secretary of Housing and Urban Development, aimed at increasing the local housing supply across the United States. The program will award grants to eligible entities, defined as metropolitan cities, urban counties, units of general local government, or Indian tribes, that have demonstrated an objective improvement in their housing supply growth. The Secretary will publish the methodology for determining housing supply growth in the Federal Register for public comment before funding opportunities are announced. Grants can be used for a wide range of purposes, including general community development activities, infrastructure projects, matching funds for clean water or drinking water programs, and initiatives specifically designed to expand the supply of attainable housing . Attainable housing is defined by specific income thresholds relative to the area median income. Examples of eligible initiatives include increasing by-right uses for various housing types, revising or eliminating off-street parking requirements, adjusting minimum lot sizes and building heights, streamlining regulatory processes, and promoting accessory dwelling units. The Secretary is mandated to award at least 25 grants annually, ranging from $250,000 to $10,000,000, with priority given to entities demonstrating innovative policies and marked improvement in housing supply growth. The bill authorizes $200,000,000 for each of fiscal years 2027 through 2031, with adjustments for inflation, and explicitly states it does not authorize the Secretary to mandate local zoning or land use policies.