Housing Counseling Overview

Housing counseling can help borrowers who are not eligible for homebuying today

We believe housing counseling from a HUD-approved nonprofit housing counseling agency can help expand the pool of mortgage-eligible buyers. For consumers deemed ineligible and who need customized assistance to become mortgage-ready, counseling may be the best pathway to homeownership.

The lender role: Developing partnerships with counseling agencies

Couple receiving housing counseling

Lenders can establish partnerships with local HUD-approved counseling agencies in their markets or work with national counseling intermediaries that provide call center-based services. Simple activities can make a big difference. For example, lenders can co-sponsor outreach activities, such as homeownership fairs or classes, to help potential buyers prepare for ownership. Lenders also can refer declined applicants to counselors who can help them get on track to becoming successful homeowners.

How does housing counseling work and what are the benefits?

One-On-One Assistance

Housing counseling, also known as advising, is best suited for borrowers facing complex challenges – those who need one-on-one assistance to develop a deep understanding of their housing needs, household budget, and how to resolve potential issues. Counseling is described as one-on-one assistance that addresses unique financial circumstances and housing issues, and focuses on overcoming specific obstacles to achieve housing goals such as:

  • repairing credit
  • locating cash for a down payment
  • recognizing predatory lending practices
  • understanding fair lending and fair housing requirements
  • avoiding foreclosure
  • resolving a financial crisis

All housing counseling involves the creation of a budget and written action plan, and may include a homeownership education component, such as Fannie Mae HomeView®. HomeView provides a 360-degree perspective on the homebuying process.

Counseling should occur as early as possible and before a buyer selects a home. Required components must be completed prior to loan closing.


Housing counseling must be provided by a HUD-certified housing counselor. The lender must retain a copy of the certificate of course completion in the loan file.


For transactions where homeownership education is required, housing counseling completed prior to the loan closing can be used to fulfill the homeownership education requirement. And exclusively for HomeReady®, HomeReady First and HFA Preferred™ purchase transactions when buyers have received housing counseling from a HUD-certified housing counselor within the 12 months prior to the loan closing date, lenders may be eligible to receive the $500 loan-level price adjustment credit if they complete the Housing Counseling data fields in DU, or on the Supplemental Consumer Information Form (Form 1103) for manually underwritten loans, and deliver the loan with SFC 184.