3.3 FHA Insured Financing & The Temporary VA Loan Policy Exception

🎯 Key 2026 Real Estate Exam Takeaways

• FHA guidelines permit sellers to pay customary buyer broker fees without counting against FHA's 6% IPC cap or reducing the mortgage.
• Historically, military veterans using VA loans were strictly prohibited from paying buyer broker fees directly.
• VA Circular 26-24-14 enacted a temporary exception allowing VA borrowers to directly pay reasonable and customary buyer-broker fees.

Government-backed loan programs operate under distinct statutory frameworks. The Federal Housing Administration (FHA/HUD) released formal regulatory guidance confirming that seller-paid buyer broker commissions do not count against FHA's 6% interested party contribution ceiling, nor do they reduce the maximum insurable FHA mortgage loan amount, provided the fees reflect customary local market practices.

The Department of Veterans Affairs (VA) home loan program presented a unique challenge. Under long-standing federal regulations (38 CFR § 36.4313), veterans were legally prohibited from paying brokerage fees or commissions directly. In a post-settlement marketplace where some sellers refuse to offer concessions, this rule threatened to leave veterans unable to secure professional representation.

In June 2024, the VA issued VA Circular 26-24-14, establishing a temporary policy exception. Under this directive, VA-eligible borrowers are permitted to directly pay reasonable and customary buyer-broker fees in transactions where the seller does not provide an adequate concession. This ensures that military service members retain equal access to buyer representation without violating federal loan guaranties.

⚠️ Common Licensing Exam Traps

• Do not believe the obsolete myth that veterans can never pay a buyer agent fee; VA Circular 26-24-14 created an explicit lawful exception.
• Remember that while FHA permits seller-paid fees, the purchase contract must explicitly document the credit to satisfy HUD underwriting review.