As of July 2024, Fannie Mae, Freddie Mac, and the FHA, the primary guarantors of most US mortgages, do not permit buyer’s agent commissions to be added to mortgage balances. This restriction exists because investors will only lend against assets that can be repossessed and sold in foreclosure, and commissions cannot be repossessed or sold. Banks would likely treat loans that finance commissions as personal loans, resulting in higher interest rates and limiting such loans to borrowers with better credit.
However, it is possible to finance commissions as long as investor guidelines are followed. For example, if a buyer has a 90% Loan-to-Value (LTV) ratio and wants to roll the 3% real estate commissions into their loan, the LTV would increase to 93%. This option is not viable if a client is already at the maximum LTV for the loan program. In such cases, buyers and sellers might negotiate a higher purchase price to include the buyer commissions, keeping in mind that the home must appraise at the higher value.
Currently, investors have indicated that real estate commissions will not be considered part of the Interested Party Contributions. However, industry experts anticipate that federal regulators will address this issue in the near future. The Federal Housing Finance Agency (FHFA) might change its rules to allow Fannie Mae, Freddie Mac, and FHA mortgages to include commissions. This would require regulators and Congress to amend several foundational rules of mortgage finance, a process that could take years or even a decade.