USA: who can pay the buyer's agent on a VA or FHA home loan

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Kooky

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A home buyer in the United States who uses a loan guaranteed by the Department of Veterans Affairs (VA) or insured by the Federal Housing Administration (FHA) is in a particular position when it comes to paying a buyer's agent, because each agency has its own rules on which charges a borrower may pay and on what a seller may pay on the borrower's behalf. For veterans the question was sharper still: the VA's fee regulation starts from the principle that a borrower pays no charge unless the regulation allows it, and a buyer's agent's commission is not on the list.

This guide sets out what the two agencies have put in writing. On the VA side that means the federal regulation on borrower charges, the circular of June 2024 that opened an exception for buyer-broker charges, the amendment and the companion circular that followed, and the status of that exception on the VA's own list of circulars as read on 10 October 2026. On the FHA side it means the statement the agency published in March 2024 on commissions paid by sellers, and the definitions in its Single Family Housing Policy Handbook. Where the documents are silent, the guide says so.

VA Circulars 26-24-14 and 26-24-15; Title 38 of the Code of Federal Regulations, section 36.4313; FHA Handbook 4000.1 glossary, last revised 26 November 2025.

Why a government-backed loan changes the question

On a VA-guaranteed loan the VA regulates what may be charged to the veteran. The rule sits in Title 38 of the Code of Federal Regulations, at section 36.4313. Its opening paragraph, as published in the electronic Code of Federal Regulations, says that no charge shall be made against, or paid by, the borrower incident to the making of a guaranteed loan unless a later paragraph of the same section permits it. Lenders must certify that they will not exceed the permitted charges.

That drafting matters. It is a closed list, so a cost that is not named is a cost the veteran may not be asked to pay. The practical effect for a buyer's agent is plain: if the commission is not on the list and no exception applies, the money has to come from someone other than the veteran.

The FHA documents read for this guide raise a different question: how a payment made by a party with an interest in the sale is classified. That is where a seller-paid commission could have caused trouble, and it is the question the agency answered in 2024.

What the VA fee regulation says about brokerage charges

Paragraph (b) of section 36.4313 states that, except as provided in the subpart, no brokerage or service charge or their equivalent may be charged against the debtor. Paragraph (c) adds that brokerage or other charges shall not be made against the veteran for obtaining any guaranty or insurance. The VA summarised the position in its own words in Circular 26-24-14: generally, a veteran cannot pay for real estate brokerage charges.

Paragraph (d) then gives the schedule of what a veteran may pay, in reasonable and customary amounts. The items are the fees of VA appraisers and inspectors; recording fees and taxes; the credit report; taxes, assessments and the initial escrow deposit; hazard insurance; a survey; title examination and title insurance; and a flood zone determination. A ninth item closes the list: such other items as may be authorised in advance by the Under Secretary for Benefits as proper local variances.

On top of the itemised costs, paragraph (d)(2) allows the lender to charge, and the veteran to pay, a flat charge not exceeding 1 per cent of the amount of the loan. That flat charge stands in place of every other origination cost that the schedule does not list. The regulation also says the listed fees are maximums. Paragraph (e) deals with the funding fee payable to the VA, which may be paid in cash at closing or included in the loan.

Two points follow for anyone reading the rule with a buyer's agent in mind. First, a commission appears nowhere in the eight named items. Second, the ninth item is a door: the Under Secretary for Benefits can add a charge to the permitted list without rewriting the regulation, provided it is done in advance and as a local variance. The 2024 circular went through that door.

The June 2024 circular: a temporary local variance

Circular 26-24-14 is dated 11 June 2024 and titled "Temporary Local Variance for Certain Buyer-Broker Charges". It was issued by the Veterans Benefits Administration by direction of the Under Secretary for Benefits and signed by John E. Bell, III, executive director of the Loan Guaranty Service. Its stated purpose is to let veterans pay certain buyer-broker charges so that, in the circular's words, they "remain competitive buyers" while the brokerage market shifts.

The circular's background section explains the legal route. It recalls that the VA regulates the fees a veteran may be charged under section 36.4313, that a veteran generally cannot pay brokerage charges, and that paragraph (d)(1)(ix) of the section lets the Under Secretary authorise other charges in advance as proper local variances. It then uses that power.

The operative paragraph says that veterans may pay reasonable and customary amounts for any buyer-broker charges, including commissions and any other broker-related fees. The circular does not set a percentage, a dollar ceiling or a definition of "reasonable and customary" for these charges. It names the charge, sets conditions around it and leaves the amount to the agreement between the veteran and the broker.

The circular's own effective date is 10 August 2024. The companion Circular 26-24-15 states the scope more precisely: the variance applies to purchase contracts signed on or after 10 August 2024.

The conditions a veteran's payment must meet

The variance is not a general licence. Circular 26-24-14 attaches four conditions, and each one has a practical consequence.

Where the home is. The home must be in an area where one of two things is true: listing brokers are prohibited from setting buyer-broker compensation through multiple listing postings, or buyer-broker compensation cannot be established by or flow through the listing broker. The condition is written around how compensation is arranged in the local market, and the circular does not name states, counties or listing services. It gives no list of qualifying areas and no procedure for deciding whether an area qualifies.

The loan amount. Buyer-broker charges are not included in the loan amount. The veteran cannot borrow the commission. This sets the charge apart from the VA funding fee, which the regulation allows to be included in the loan.

Liquid assets. Buyer-broker charges paid or to be paid by the veteran are counted when the lender determines whether the veteran has sufficient liquid assets to close, a test the circular ties to section 36.4340(h) of the same title. A veteran who agrees to pay an agent therefore has to show the cash for it alongside every other closing cost.

Documents. No invoice is required for the charge. Instead, the circular treats the buyer-broker representation agreement as part of the sales contract package. Lenders are expected to upload the agreement with the package used to request the appraisal and to keep it in the loan file. The written agreement between buyer and broker thus becomes a document in the lender's file on a VA loan.

When one of the conditions is not met, the circular offers no fallback of its own. The variance is the only authority it gives for a veteran to pay the charge; outside it, the general rule of section 36.4313 applies again, and under that rule the brokerage charge may not be charged against the borrower.

How the charge is recorded and reported to the VA

The original circular told lenders to record the total amount paid by the veteran in lines 1 through 3 of Section H, headed "Other", on the Closing Disclosure, the form that sets out the final costs of the loan. Less than two months later, and five days before the variance took effect, the VA changed that instruction. Change 1 to the circular, dated 5 August 2024, replaces the sentence: the total amount paid, if any, by the veteran is to be recorded in Section H ("Other") on the Closing Disclosure. The reference to particular lines is gone. As read for this guide, Change 1 replaces that paragraph only.

The second reporting step sits in the VA's own system. Circular 26-24-15, dated 19 July 2024 and titled "Guaranteeing VA Loans with Veteran-Paid Buyer-Broker Charges", announced an addition to the Issue Guaranty screen in WebLGY, the system lenders use to obtain the guaranty. The enhancement was released on 16 July 2024. When a lender requests a Loan Guaranty Certificate on a VA-guaranteed purchase loan, it should indicate whether the veteran paid any buyer-broker charges and, if so, enter the total amount.

Taken in order, a veteran-paid charge leaves a trail of four records on a VA purchase:

1. The buyer-broker representation agreement, uploaded with the sales contract package when the appraisal is requested.
2. The lender's assessment of liquid assets, which counts the amount the veteran will pay.
3. Section H of the Closing Disclosure, which shows the total the veteran paid.
4. The WebLGY entry made when the lender asks for the Loan Guaranty Certificate.

The VA's list of circulars also carries Circular 26-24-19, dated 13 September 2024, on invoice requirements for itemised fees and charges paid by veterans, with a Change 1 issued in 2026. As summarised on that list, it does not name buyer-broker charges, and Circular 26-24-14 states on its own terms that no invoice is required for them.

When the seller pays the veteran's agent

The variance adds an option; it removes none. Circular 26-24-14 says in terms that it does not stop the seller from paying the veteran's buyer-broker charges. It also encourages veterans to negotiate the amount of the charge, whether the veteran or the seller ends up paying it, with a reference to section 36.4333 of Title 38.

A third sentence settles a point that affects the rest of the offer. The VA does not treat a seller's payment of buyer-broker charges as a seller concession, and the circular points to Chapter 8, Topic 5 of the VA Lenders Handbook, known as M26-7. A payment by the seller towards the veteran's agent is therefore kept apart from whatever the handbook counts as concessions. The circular does not restate the handbook's concession rules, and this guide does not either.

A worked example shows how the pieces fit. The assumptions are illustrative and are not market data: a purchase price of US$400,000, no down payment, so a loan of US$400,000 before any funding fee, and a buyer-broker agreement that sets the charge at 2.5 per cent of the price, which is US$10,000.

• If the veteran pays the whole charge, the US$10,000 stays outside the loan, is counted in the liquid assets the veteran must show, appears in Section H of the Closing Disclosure and is entered in WebLGY.
• If the seller agrees to pay US$6,000 of it, the veteran pays the remaining US$4,000. That US$4,000 is the figure counted in liquid assets, recorded in Section H and reported in WebLGY.
• If the seller pays all US$10,000, the veteran pays nothing on this line, and under the circular the seller's payment is not a seller concession.

In the same example, the most the lender could take as its flat charge under paragraph (d)(2) of section 36.4313 is 1 per cent of US$400,000, which is US$4,000. The buyer-broker charge is not part of that flat charge: it is a separate item, admitted to the permitted list through the local variance. The two figures of US$4,000 in this example are a coincidence of the assumptions.

Is the VA rule permanent?

The word "temporary" is in the circular's title, and the text explains why. Circular 26-24-14 says the VA will develop a more permanent policy later, through a new notice-and-comment rulemaking, as the real estate brokerage market restabilises and new practices take hold. Circular 26-24-15 repeats the intention, saying the VA plans to gather input towards more permanent rulemaking.

Neither circular carries an expiry date. Each one, and Change 1, says it remains valid until rescinded. The VA's list of home loan circulars, read on 10 October 2026, still shows all three with that status: Circular 26-24-14 of 11 June 2024, its Change 1 of 5 August 2024 and Circular 26-24-15 of 19 July 2024. The list shows no later change to the variance and no circular announcing a final rule on buyer-broker charges.

So the position on the VA's own pages is this. Veterans have been able to pay buyer-broker charges, under the stated conditions, on purchase contracts signed since 10 August 2024. The authority for it remains a local variance issued under paragraph (d)(1)(ix) of section 36.4313. The text of section 36.4313 in the electronic Code of Federal Regulations still contains the general bar on brokerage charges in paragraph (b) and does not list buyer-broker charges among the items a veteran may pay. Whether a proposed rule has been published in the Federal Register is not something the pages read for this guide establish; the circulars list does not mention one.

A variance that is valid until rescinded can last a long time, but it is not the regulation: the permanent rule the VA promised in June 2024 has yet to appear on its list of circulars.

FHA: when a seller-paid commission is not a contribution

FHA's handbook, Handbook 4000.1, uses the term "interested parties". Its glossary, last revised on 26 November 2025, says the term refers to sellers, real estate agents, builders, developers, mortgagees and third party originators, among others. An interested party contribution, in the same glossary, is a payment by an interested party or a combination of parties. Both the seller and the agents are on the list, so a seller paying the fee of the buyer's agent is, on its face, a payment by one interested party connected to another.

That is why the question of where the agency stood arose in early 2024, after a nationwide settlement involving the National Association of Realtors had been proposed. HUD answered on 27 March 2024 in release 24-063, "Statement from the Federal Housing Administration on Seller-Paid Commissions". The release says it responds to questions about how the proposed settlement would affect the treatment of seller-paid real estate broker fees for buyers under the FHA programme.

The answer is one sentence with three conditions. If sellers continue to pay buyer-side real estate agent commissions and fees as a matter of state or local law or local custom, and if the commissions and fees are reasonable in amount, FHA's existing policy would not treat those payments as interested party contributions, provided all other requirements are met. FHA added that it would closely monitor the marketplace for changes resulting from the settlement and would address additional questions as they develop.

Three features of the statement are worth reading closely. It describes existing policy; it does not announce a new rule or amend the handbook. It is conditional on the payment being a matter of law or local custom and on the amount being reasonable, and it defines neither "custom" nor "reasonable". And it is an unsigned agency statement: no official is quoted. HUD's archive notes that the page was archived on 3 February 2025.

What the FHA statement leaves open

The statement of 27 March 2024 does not give the limit that applies to interested party contributions, and it does not cite a section of Handbook 4000.1. It says a qualifying seller-paid commission falls outside the category; it does not describe what happens to a payment that fails one of the conditions, for instance a fee that a lender judges not to be reasonable in amount. The outcome depends on the handbook text and on the lender's review of the case.

The release is also silent on the opposite arrangement, in which an FHA borrower pays their own agent directly. It speaks only of commissions and fees paid by sellers.

Two handbook definitions set the borrower's own cash requirement. The glossary defines the minimum required investment as the borrower's contribution in cash or its equivalent required by section 203(b)(9)(A) of the National Housing Act, representing at least 3.5 per cent of the adjusted value of the property. For a purchase, the adjusted value is the lesser of two figures, the first of which is the purchase price less any inducements to purchase. The second figure was not read for this guide.

As a worked example with illustrative figures: on a purchase price of US$300,000, with no inducements to purchase and assuming the adjusted value equals that price, the minimum required investment is at least 3.5 per cent of US$300,000, which is US$10,500. If the seller also pays the buyer's agent a fee of 2 per cent of the price, US$6,000, and the three conditions of the HUD statement are met, that US$6,000 is not treated as an interested party contribution. The limit that the handbook places on interested party contributions was not verified for this guide and is not stated here.

The two programmes side by side

The two agencies answered different questions. The VA had a regulation that barred the borrower from paying a brokerage charge, and it wrote an exception. FHA had a category that might have caught a payment by the seller, and it said the category did not apply when its conditions were met.

For an agent working with a veteran, the documents point to a short list of facts that shape the conversation: the location condition, the cash requirement, the place of the representation agreement in the lender's file, and the freedom the seller keeps to pay. For an agent working with an FHA borrower, the statement turns on local law or custom and on a reasonable amount, two tests the statement does not define. In both programmes the answer for a given purchase depends on its own contract, its own market and the lender's reading of the agency's text.

Kooky, from Shaka

Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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