When You Need Homeownership Education or Housing Counseling
Who Must Complete Homeownership Education
Fannie Mae requires homeownership education in four specific situations. The requirement applies to purchase transactions and construction-to-permanent loans processed as purchases. You need homeownership education if none of the borrowers on your loan have any credit accounts or installment accounts showing on their credit reports. This applies regardless of whether you're a first-time homebuyer and regardless of your loan product. Desktop Underwriter will flag this requirement during the automated underwriting process. Say you're applying for a conventional loan but you've never had a credit card, auto loan, or any other type of credit account. Even if you have excellent income and assets, you'll need to complete homeownership education before closing because you have no established credit history. Manual underwriting triggers the same requirement if all borrowers lack credit scores. This catches borrowers who might have some credit history but not enough to generate a FICO score.
First-time homebuyers face education requirements in two scenarios. If you're getting a HomeReady loan and all occupying borrowers are first-time buyers, education is mandatory. The same applies to any purchase loan with loan-to-value, combined loan-to-value, or home equity combined loan-to-value ratios above 95% when all borrowers are first-time buyers.
Consider a married couple buying their first home with 3% down. Their loan-to-value ratio is 97%, and both are first-time homebuyers. They must complete homeownership education regardless of their credit scores or loan type.
What Qualifies as Homeownership Education
Homeownership education must come from a qualified third-party provider that's independent of your lender. The provider's curriculum must align with National Industry Standards for Homeownership Education and Counseling or HUD standards.
The education covers essential homeownership topics like the home-buying process, home maintenance, budgeting, and credit management. You can complete it through various formats: in-person classes, online courses, telephone sessions, or hybrid approaches.
Your lender must verify that the course content meets NIS or HUD standards. They'll also need to keep a copy of your completion certificate in the loan file. Make sure you get this certificate from your education provider.
Housing Counseling as an Alternative
Housing counseling provides one-on-one assistance tailored to your specific financial situation and housing goals. Unlike group education, counseling addresses your unique circumstances and obstacles.
Only HUD-approved agencies can provide qualifying housing counseling. The counseling must meet HUD standards and cover topics like credit repair, down payment assistance, predatory lending recognition, and foreclosure prevention. Every counseling session includes budget creation and a written action plan.
Housing counseling automatically satisfies the homeownership education requirement. If you complete counseling, you don't need separate education classes. The counselor will provide a completion certificate that your lender must retain.
HomeReady Pricing Benefits
HomeReady borrowers who complete housing counseling within 12 months before closing may qualify for a loan-level pricing adjustment credit. This credit can reduce your interest rate or closing costs.
To get this benefit, your lender must submit the housing counseling data to Desktop Underwriter and deliver the loan with Special Feature Code 184. The counseling must come from a HUD-approved agency and meet all standard requirements.
The timing matters here. Complete your counseling too early, and you won't qualify for the credit. Complete it after closing, and you've missed the opportunity entirely.
Required Documentation
Your lender must complete the Supplemental Consumer Information Form (Form 1103) for transactions requiring homeownership education or housing counseling. This form documents your completion of the requirement.
The key documents you need to provide are your completion certificate from the education provider or housing counseling agency. Your lender will verify the provider meets Fannie Mae standards and keep the certificate in your loan file.
For HomeReady loans seeking the pricing credit, your lender must also submit the completion date and Housing Counseling Agency ID to Desktop Underwriter. This data isn't required for underwriting but is necessary for the pricing benefit.
Common Complications
The biggest mistake borrowers make is waiting too long to start their education or counseling. These programs take time to complete, and you must finish before closing. Starting the process during your loan application gives you the best chance of meeting the deadline.
Not all education providers meet Fannie Mae standards. Your lender must confirm the provider's curriculum aligns with NIS or HUD requirements. Using a non-qualifying provider means you'll need to repeat the education with an approved source.
Some borrowers assume online education is automatically acceptable. While online formats are allowed, the content and provider must still meet all standards. Free online courses from random websites won't satisfy the requirement.
For housing counseling, remember that only HUD-approved agencies qualify. This includes agencies participating in HUD programs through approved intermediaries or State Housing Finance Agencies. Private counselors or financial advisors don't meet the requirement unless they're HUD-approved.
References
For the official guidelines, see B2-2-06: Homeownership Education and Housing Counseling in the Fannie Mae Selling Guide.
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Original Fannie Mae Guideline Text
B2-2-06, Homeownership Education and Housing Counseling (11/05/2025)
Definitions
Transactions that Require Homeownership Education
Meeting the Homeownership Education Requirement
Housing Counseling
Completion of Supplemental Consumer Information Form (Form 1103)
Additional Resources
Summary of Homeownership Education and Housing Counseling Options
Overview
Fannie Mae believes that credit and underwriting guidelines alone are not always enough to assess a borrower’s readiness for homeownership. High-quality homeownership education and housing counseling can provide the borrower with additional information and resources to make informed decisions that support long-term homeownership sustainability. Fannie Mae requires programs that are aligned with the National Industry Standards (NIS) for Homeownership Education and Counseling or the U.S. Department of Housing and Urban Development (HUD) Counseling Program, or provided by a HUD-approved counseling agency.
Compliance with Law
All education, collection, and counseling efforts must comply with the requirements of applicable federal and state laws, including the Equal Credit Opportunity Act, the Fair Debt Collections Practices Act, and the Fair Credit Reporting Act.
Definitions
The following definitions apply to these requirements:
Homeownership Education: Education with an established curriculum and instructional goals, provided in a group, classroom setting, or via other formats, that covers homeownership topics such as the home-buying process, how to maintain a home, budgeting, and the importance of good credit.
Housing Counseling: One-on-one assistance that addresses unique financial circumstances and housing issues, and focuses on overcoming specific obstacles to achieve housing goals. Counseling includes topics such as repairing credit, locating cash for a down payment, recognizing predatory lending practices, understanding fair lending and fair housing requirements, avoiding foreclosure, and resolving a financial crisis. All housing counseling involves the creation of a budget and a written action plan and includes a homeownership education component.
Transactions that Require Homeownership Education
For the following transactions, at least one borrower on the loan must complete homeownership education prior to loan closing:
if none of the borrowers on a purchase transaction underwritten in DU has at least one credit account or installment account reported on their credit report, regardless of the loan product or whether the borrowers are first-time homebuyers (as instructed by DU);
if all borrowers on a manually underwritten purchase transaction do not have a credit score, regardless of the loan product or whether the borrowers are first-time homebuyers;
HomeReady purchase transactions when all occupying borrowers are first-time homebuyers; or
purchase transactions with LTV, CLTV, or HCLTV ratios greater than 95%, when all borrowers are first-time homebuyers.
Note: The requirements that apply to purchases also apply to construction-to-permanent transactions that are processed as a purchase.
Meeting the Homeownership Education Requirement
To satisfy the homeownership education requirement, Fannie Mae permits any qualified third-party provider, independent of the lender, to administer homeownership education. The provider’s content must be aligned with NIS or HUD standards. The education may be delivered in various formats (in-person, Internet, via telephone, or a hybrid format). In lieu of homeownership education, the borrower may receive housing counseling.
The lender must confirm the course content is aligned with NIS or HUD standards and must retain a copy of the certificate of course completion in the loan file.
Housing Counseling
Housing counseling must be provided by a HUD-approved agency and meet HUD standards for the delivery of this service. The following requirements apply when counseling is obtained to satisfy the homeowner education requirement above:
If a borrower opts to work with a housing counselor, completion of housing counseling prior to closing will also satisfy Fannie Mae’s homeownership education requirement. The lender must retain a copy of the certificate of course completion in the loan file.
HomeReady loans where borrowers who complete housing counseling within 12 months prior to closing may be eligible for a loan-level price adjustment credit. For the LLPA credit to be applied to the loan
the Housing Counseling data must be submitted to DU, and
the loan must be delivered with SFC 184.
See Chapter B5-6, HomeReady Mortgage for additional information.
Note: References to the use of a HUD-approved agency include affiliated agencies (as defined in the HUD Housing Counseling Program Handbook) participating in a HUD program through a HUD-approved intermediary or State Housing Finance Agency.
Completion of Supplemental Consumer Information Form (Form 1103)
Lenders are required to present the Supplemental Consumer Information Form (Form 1103) to the borrower. The lender or borrower should complete the Homeownership Education and Housing Counseling section of the form for those transactions where homeownership education or housing counseling is required.
Any data collected that is associated with Form 1103 should be provided to DU. Though not required for underwriting, the date of completion and Housing Counseling Agency ID must be provided to DU on loans for HomeReady borrowers eligible for the housing counseling LLPA credit referenced above.
Additional Resources
Fannie Mae provides additional resources to lenders, borrowers, and nonprofit agencies in support of homeownership education and housing counseling on its website.
Summary of Homeownership Education and Housing Counseling Options
The following table provides additional information to differentiate between homeownership education and housing counseling.
Course Content
Course content must align with NIS or HUD standards
Course content must align with HUD standards
Method of Delivery
Any method offered by an eligible provider
Any method offered per HUD standards
