HUD housing counselors for first-time buyers

What a counselor can help with

HUD lists the services its participating agencies may offer. Not every agency offers all of them, but the ones most relevant to buyers are:

• pre-purchase counseling and homebuyer education workshops
• financial management, budget and credit counseling
• predatory lending education
• fair housing education
• home improvement and rehabilitation counseling
• post-purchase workshops for new owners who are not behind on payments

For a first-time buyer, pre-purchase counseling usually means a review of income, debts, savings and credit; an honest look at what payment you can carry; and a written plan for the steps between now and a purchase. A counselor can also explain the local down payment assistance programs, many of which require counseling or a homebuyer course.

Counseling versus a workshop

HUD draws a clear line between the two. Counseling is individual advice built around your circumstances. HUD says it includes intake, a financial and housing affordability analysis, an action plan and a reasonable effort at follow-up. A workshop is a general overview of housing topics, usually delivered to a group in a classroom or online.

Both have a place. A workshop is a good way to learn the vocabulary of buying. Counseling is where you work through your own numbers. Some loan and assistance programs require one or the other. Fannie Mae's Selling Guide, for example, accepts housing counseling in place of homeownership education when its programs require education.

What it costs

HUD's answer is direct. Foreclosure, eviction and homeless counseling are always free. Other types of counseling and workshops may be offered for a nominal, reasonable and customary fee. The agency has to tell you about any fee before counseling begins, and it must waive a fee you cannot afford.

Ask about cost when you call, since fees vary from one agency to the next. If you are applying for a down payment assistance program, ask the program too, because some name the counseling providers they accept.

Independence

Two HUD rules make counseling different from a sales conversation:

Certification. A HUD-certified housing counselor has passed HUD's certification exam and must work for a participating agency.

No strings. Participating agencies cannot make your access to counseling depend on your using any product or service offered by the agency, its affiliates or its community partners. An agency may run its own assistance program or partner with lenders, but you can get counseling without signing up for either.

You can confirm that an agency participates by finding it in HUD's search tool.

How to find one

HUD gives two routes:

• Online. HUD's housing counseling search tool lets you filter by location, service, language and method, such as in person, phone or online. The CFPB offers a search tool too.
• By phone. Call 800-569-4287 to reach a live operator who can help you find an agency. HUD says operators can assist in many languages. The TTY number is 202-708-1455.

If no agency is close by, HUD notes that national intermediaries and state housing finance agencies serve rural and remote areas, and many agencies offer secure phone or online sessions.

How to prepare

Bring enough to make the meeting concrete:

• your two most recent pay stubs, or recent tax returns if you are self-employed
• recent statements for checking, savings and retirement accounts
• a list of monthly debts with balances and payments
• your credit reports from AnnualCreditReport.com
• your current rent and what you spend in a typical month
• the price range and neighborhoods you have in mind

Write down your questions in advance. Good ones include which assistance programs fit your income, what payment you can carry, and what to fix first.

After the session

Ask for your action plan in writing and a certificate if your loan or assistance program requires proof of counseling. Programs often name the course or counseling they accept, so confirm before you start. Keep the certificate with your loan documents.

You can return as your plans change. HUD describes follow-up as part of counseling, so check in again when you are ready to get preapproved or when an offer is accepted.

The bottom line

A HUD-certified counselor gives you one-on-one advice on your budget, credit and readiness to buy, through an agency that has to follow HUD's rules on fees and independence. Call 800-569-4287 or search HUD's tool, ask about fees, bring your documents and leave with a written plan.