Housing Counseling Overview
We believe that housing counseling and foundational education are key to preparing borrowers for homeownership and growing the pool of mortgage-ready buyers. For consumers who are not yet eligible and need personalized guidance to overcome financial or credit challenges, HUD-approved housing counseling provides a proven pathway to homeownership.
Developing Partnerships with Counseling Agencies
Lenders can strengthen borrower readiness by partnering with local HUD-approved counseling agencies or national intermediaries that provide call center-based services. Even simple initiatives—such as co-sponsoring homeownership fairs or educational classes—can make a significant impact in preparing potential buyers for ownership.
Additionally, lenders may refer declined applicants to counselors who offer personalized guidance to help them become mortgage-ready.
Any qualified third-party provider, independent of the lender, may deliver homeownership education, provided the course meets HUD or National Industry Standards (NIS). Borrowers seeking additional assistance can use the Housing Counseling Services search tool to find a HUD-participating counseling agency near them.
How Housing Counseling Works — and What Are the Benefits?
One-On-One Assistance
Housing counseling provides personalized, one-on-one guidance from HUD-approved nonprofit agencies to help borrowers navigate complex housing challenges and prepare for successful homeownership. Counselors offer unbiased advice early in the process—before critical decisions are made—and can be especially helpful for those facing financial setbacks or recovering from a disaster.
Areas where housing counselors provide guidance:
- Credit analysis, education and evaluation
- Locating resources for down payment assistance
- Recognizing predatory lending practices
- Understanding fair lending and fair housing requirements
- Avoiding foreclosure and resolving financial crises
- Creating a household budget and written action plan
Every housing counseling session includes creating a realistic budget and a written action plan tailored to the borrower’s goals. Counseling may also include a homeownership education component, such as Fannie Mae's HomeView®, which provides a 360-degree view of the homebuying process.
To maximize its impact, counseling should begin as early as possible—ideally before the buyer selects a home. All required components must be completed prior to loan closing.
Requirements
Housing counseling must be provided by a HUD-certified housing counselor, and the lender must retain a copy of the course completion certificate in the loan file.
For transactions requiring homeownership education, housing counseling completed within 12 months prior to loan closing can satisfy this requirement and may qualify for a loan-level price adjustment (LLPA) credit. To apply the LLPA credit, Housing Counseling data must be submitted to DU or included on the Supplemental Consumer Information Form (Form 1103) for manually underwritten loans, and the loan must be delivered with SFC 184.
