Buyer Financing and Commission Financing After the Settlement

Louisiana REALTORS® • March 22, 2024

A Message from Ken Fears, NAR Director of Conventional Finance and Valuation Policy

The recently announced settlement raised several questions regarding access to mortgages and the ability to finance agent commissions. In short, under the settlement, buyers still have the same options when it comes to compensating their representative. That is, the listing brokers can compensate the buyer broker, the seller can compensate the buyer broker, or the buyer can compensate their broker directly. Based on conversations with contacts at agencies, we believe buyers should still be able to get financing from Fannie Mae, Freddie Mac, and the FHA under these scenarios. However, none of these agencies will allow the buyer to finance a commission into the mortgage at this time. The VA has not addressed whether it will change its requirement prohibiting VA buyers from paying the commission. NAR will continue to work with our partners in the lending community to gain greater clarity on guidance from the agencies and to maintain the steady flow of funding for closing home purchases.


Will buyers still be able to obtain a mortgage after the settlement?

Yes, based on our interpretation of the regulations, buyers should still be able to get financing from Fannie Mae, Freddie Mac, and the FHA if the listing broker compensates the buyer's broker or if the seller pays the buyer's broker directly. However, none of these agencies will allow the buyer to finance a commission into the mortgage at this time. NAR is working to get clear verification on this point.


Based on information in the guides that Fannie Mae, Freddie Mac and the FHA provide to lenders, nothing has changed the ability of buyers to get a mortgage through them. Each of these agencies specifies limits on how much a seller or broker can contribute to the buyer to pay for services typically paid by the buyer. These payments to the buyer are called interested party contributions (IPCs). The agencies exclude fees "traditionally" or "customarily" paid by the seller from the IPCs. These IPCs may vary from 3% or up, so adding a commission could take up room otherwise used for closing cost or rate buydown concessions. Thus, despite being a seller concession on the sale contract, a seller paid commission is not included in the IPC. This interpretation is not expected to change when this settlement is complete.


However, if sellers paying the buyer agent's commission ceases​ to be the norm in the future, regulators will need to change the definition of IPCs to exclude seller-paid commissions or raise the IPC limit.


See Fannie Mae's selling guide, Part B3-4.1-02, Interested Party Contributions and Part B3-4.1-03, Types of Interested Party Contributions (IPCs). Also, see pp. 420 of the Fannie Mae Selling Guide: "Typical fees and/or closing costs paid by a seller in accordance with local custom, known as common and customary fees or costs, are not subject to Fannie Mae IPC limits."


See FHA's discussion of IPCs and exclusion of seller paid real estate commissions here.


Can real estate commissions be financed?

Financing commissions is not feasible under the current structure of the residential mortgage finance system, and there is no clear short-term legislative or regulatory fix. NAR is working to get clear confirmation on this point.


  • Banks would treat such a loan as a personal loan that would have higher rates and they would limit access to those loans to borrowers with better credit profiles. Furthermore, that personal loan would add to the buyers' liabilities and make it harder to qualify for the mortgage they are seeking.
  • Fannie Mae, Freddie Mac, and FHA do not allow commissions to be added to the balance of the mortgage.​ Simply put, investors will only lend against the asset they can take back and sell in a foreclosure. An investor would not be able to take back and sell the commission for a service like real estate brokerage.
  • Finally, there are significant limits to adding commissions to the mortgage rate. Several rules that make up the foundation of mortgage finance would need to be changed by the regulators and Congress. Those rules took years to develop, implement, and refine, and changing them could take years, potentially a decade or more.

Update from 2025 REALTORS® Legislative Meetings

By Louisiana REALTORS® • June 6, 2025
The National Association of REALTORS® Board of Directors approved a 2026 budget with no dues increase and passed a Professional Standards Recommendation to clarify language in NAR Code of Ethics Standard of Practice 10-5, which prohibits harassment of any person or persons protected under Article 10 of the Code. A day earlier, the Executive Committee approved another Professional Standards change, revising language for Policy Statement 29 designed to ensure state and local associations can fairly and consistently enforce the Code of Ethics. Learn more about the changes. Read the revised Code of Ethics and Standards of Practice. Board members also approved a consent agenda to elect the 2026 officers and regional vice presidents . Christine Hansen of Ft. Lauderdale, Fla., was elected 2026 President-Elect, and Colin Mullane of Ashland, Ore. was elected 2026 First Vice President. The meeting opened with a video message from President Donald Trump, who welcomed REALTORS® to Washington and thanked them for support of the House-passed tax reform. NAR routinely invites the U.S. president to address REALTORS® at the Washington meetings. Over NAR's history, nine sitting presidents have addressed the association. Board Actions Approved a series of Finance Committee recommendations, accepting the association’s financial statement, approving the 2026 operating and advocacy budgets, and keeping dues at $156. The board actions also redirect $35 of the $45 Consumer Advertising Campaign assessment to operating funds. This change positions NAR to make its next settlement payment in February 2026 and maintain a balanced budget without raising total dues. The remaining $10 for the Consumer Advertising Campaign will fund optimized, metrics-driven activities that reach and engage consumers in critical markets. NAR CEO Nykia Wright and President Kevin Sears explained the shift at the opening session of the conference . Amended Standard of Practice 10-5 to give state and local associations greater clarity in how to fairly and consistently enforce Article 10 of the Code of Ethics. The amended Standard of Practice says that REALTORS®, in their capacity as real estate professionals, in association with their real estate businesses, or in their real estate-related activities, shall not harass any person or persons based on race, color, religion, sex, disability, familial status, national origin, sexual orientation, or gender identity. Made a series of recommendations to the Standards of Practice to bring the language in line with the terms of NAR’s 2024 settlement. Approved a motion to make one member of the Executive Committee a commercial practitioner who has served as chair, vice chair or liaison of an NAR commercial-related committee or forum to serve a two-year term and be independent of the 10% commercial representation requirement outlined in the NAR Constitution. Approved a recommendation from the Credentials and Campaign Rules Committee to amend qualifications for president-elect, first vice president and treasurer effective Jan. 1, 2026. Qualifications for top-line officers are now aligned with those already in place for regional vice presidents. Approved recommendations from the Member Accountability Committee related to applications for volunteer leadership and the Statement of Appropriate Event Conduct. The goal of the recommendations is to ensure members found in violation of the NAR Member Code of Conduct are properly disclosed. Award Winners NAR President Kevin Sears announced the 2025 Distinguished Service Award winners James P. Cormier , AHWD, C2EX, of Minneapolis-St. Paul, and Brooke S. Hunt , AHWD, E-PRO, SFR, SRS, C2EX , of Flower Mound, Texas. In addition, the group recognized the winner of the 2024 William R. Magel Award, Anne Marie DeCatsye , CEO of the Canopy REALTOR® Association and Canopy MLS in the Charlotte, N.C., metro area. REALTORS® Relief Foundation  During the meeting, REALTORS® Relief Foundation President Greg Hrabcak appealed to board members to make a tax-deductible donation. The fund provides housing assistance to victims in the immediate aftermath of a disaster; 100% of funds donated go to disaster relief. “We’ve had devastating wildfires in California, tornadoes in Missouri and Kentucky and flooding in West Virginia, and we’re still in the first half of this year,” Hrabcak said. Before the meeting ended, directors had donated more than $41,000.
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