Published: October 18, 2026 · By the Chicago Condo Loans Editorial Team
Quick answer Fannie Mae requires at least one borrower to complete homeownership education before closing when every borrower is a first-time homebuyer and the loan-to-value ratio is above 95%, which covers the 3%-down (97% LTV) condo loan. It is also required on HomeReady purchases when all occupying borrowers are first-time buyers, and when no borrower has a credit account (DU) or credit score (manual underwriting). Any qualified provider independent of the lender can teach it; housing counseling from a HUD-approved agency also counts.
This is part of our first-time condo buyer checklist.
When is homeownership education required?
| Situation | Education required? |
|---|---|
| Purchase above 95% LTV (CLTV or HCLTV), all borrowers first-time buyers | Yes, at least one borrower |
| HomeReady purchase, all occupying borrowers first-time buyers | Yes, at least one borrower |
| DU purchase where no borrower has a credit account | Yes, regardless of product or first-time status |
| Manually underwritten purchase where no borrower has a credit score | Yes, regardless of product or first-time status |
| Purchase at 95% LTV or less with a standard conventional loan and credit history | Not required by Fannie Mae (a lender or program may still ask) |
“First-time homebuyer” has a specific meaning: you’ll live in the home as your principal residence and haven’t had an ownership interest in a residential property in the past three years (with extra provisions for displaced homemakers and single parents). Our checklist walks through the definition.
Who can provide it?
- Any qualified third-party provider independent of the lender, with content aligned to National Industry Standards (NIS) or HUD standards. The lender confirms the alignment and keeps the certificate in your file.
- Housing counseling from a HUD-approved agency can be used instead, and completing it before closing satisfies the requirement.
- IHDA’s Access down payment programs also require homeownership education before closing, so if you use one, ask whether a single course can satisfy both.
Is there a benefit beyond meeting the rule?
For HomeReady borrowers, completing housing counseling within 12 months before closing may earn a loan-level price adjustment credit, if the lender submits the counseling data to DU. Separately, all LLPAs, including the condo LLPA, are waived on HomeReady loans and for first-time buyers with qualifying income at or below 100% of area median income; see what the condo LLPA costs.
When should I do it?
Early. The certificate must be complete before closing, and a condo purchase already has a long list of time-sensitive items: the building review, the Illinois 22.1 disclosures and insurance documents. Doing the course while you are getting preapproved removes one item from the last week. See condo down payments and PMI for the 3%-down options.
Frequently asked questions
Do I need homeownership education for a 3% down condo loan?
Yes, if every borrower is a first-time homebuyer. Fannie Mae requires at least one borrower to complete it before closing when the LTV, CLTV or HCLTV is above 95% and all borrowers are first-time buyers.
Does housing counseling count instead of a course?
Yes. Housing counseling from a HUD-approved agency can be used in lieu of homeownership education, and completing it before closing satisfies the requirement.
Can my lender teach the course?
No. Fannie Mae requires a qualified third-party provider independent of the lender, with content aligned to NIS or HUD standards.
Is homeownership education required with 10% down?
Not under Fannie Mae’s standard rule if you have credit history, unless it is a HomeReady purchase where all occupying borrowers are first-time buyers. A lender or assistance program can still require it.
Sources
- Fannie Mae Selling Guide B2-2-06, Homeownership Education and Housing Counseling (11/05/2025)
- Fannie Mae Selling Guide glossary, First-Time Homebuyer
- Fannie Mae Loan-Level Price Adjustment Matrix (Sept. 30, 2026)
- IHDA, Getting an IHDA Loan
Educational content only. We are not a lender or broker, and this is not lending, legal or financial advice. Rules change; confirm details with your lender and attorney.