Required Homebuyer Education Classes for Certain Programs

Homebuyer assistance programs and many lenders require borrowers to take a homebuyer education course as part of their loan qualification processes. Mortgage education is key to building your confidence in homebuying and ownership and gaining a better understanding of the lending process. 

If you are a first-time homebuyer, even if not required to attend a course, you should consider signing up for one on your own, as they highlight ways to prepare your finances and credit for homeownership, in addition to teaching you how to successfully manage a home loan after closing. 

Taking a first-time home buyer class not only gives you textbook knowledge, but it can also help you qualify for more affordable loan programs and assistance opportunities. 

What is a homebuyer education course?

A homebuyer education course is an online or in-person class taken to better understand the processes involved in finding, buying, and owning a home. 

Homebuyer education courses are typically offered as a pass/fail class, though some have a type of grading system, and the borrower receives a certificate upon completion of the course.

Lenders and loan programs require these classes because there is a connection between education and foreclosure prevention, indicating the more home buyers know about the way mortgages work the less likely they are to default on their loans. 

When is a home buyer education course required?

Mortgage loans designed specifically for first-time home buyers typically include home buyer education as an eligibility requirement.

This is almost always required for borrowers who need a closing cost or down payment assistance grant or loan. Some home loan programs only require home buyer education if you’re a first-time home buyer, while repeat buyers don’t need the course.

The best time to complete a homebuyer education course is as soon as you begin your home search and well before closing on your mortgage so you can prepare going into the process. 

What you'll learn in a homebuyer education course

Courses are different depending on the organization offering it and the range of material it covers, as well as whether it’s an in-person or online class, but all generally cover the following topics:

• Getting a mortgage and the professionals involved
• Credit and debt ratios and how they affect mortgages 
• The home buying process and upfront costs
• Smart money management
• Making mortgage payments and foreclosure prevention
• Homeownership, including maintenance and home features to consider, and home equity

Cost of a homebuyer education course

Homebuyer education classes charge borrowers a small tuition fee of $25 to $125 that can be paid upfront out of pocket or added to the lending fees paid at closing.

Free home buyer education courses

There are free homebuyer education courses available, however, different education providers have different standards that may not meet your lender’s requirement, even if you have a certificate of completion.

Most lenders require U.S. Department of Housing and Urban Development (HUD) approved courses to meet the education requirement. So, it is important to confirm any class taken is HUD-approved. 

How long does a homebuyer education course take?

Many homebuyer education courses are four to eight hours long. A course can usually be completed in a day or two, either online or in-person location. 

Often, courses offered online allow you to complete them at your own pace. 

How to find homebuyer education courses 

Most homebuyer education courses and first-time homebuyer classes are offered by lenders, nonprofit housing counselors, community development corporations, organizations providing down payment assistance and real estate brokerages, Hendrix-Griffin says.

To find a housing counseling agency and course near you, check out this list provided by HUD, or look to your state housing finance authority (see this additional HUD directory) for guidance.

Benefits of homebuyer classes

Not only do homebuyer classes equip you with the knowledge needed to navigate the home buying process, completing a home buyer education requirement can also open additional perks to an affordable mortgage. Including:

• Lower down payment requirements
• Down payment and closing cost assistance or grants and bonds from your lender
• Lower mortgage rates
• Flexible requirements with lower income or credit
• Opportunities to use roommate or rental income to qualify for the loan
• Programs allowing 100% gift funds to pay closing costs

The time you spend in a homebuyer education class can pay off, saving you money on your mortgage loan, and ease your path to homeownership.