Skip to main content

Pre-Purchase Counseling Outcomes

HUD USER Home > PD&R Edge Home > Research

Pre-Purchase Counseling Outcomes

For more than 40 years, the Department of Housing and Urban Development (HUD) has funded housing counseling program grants to help consumers rent, purchase, and own homes. To further its objective of learning more about the outcomes of housing counseling, HUD recently released two reports focusing on foreclosure and pre-purchase counseling. Results from the “Foreclosure Counseling Outcome Study” are discussed in a previous Edge article, and the findings from the study of pre-purchase counseling are detailed below.

The “Pre-Purchase Counseling Outcome Study” examines the characteristics of pre-purchase counseling clients, the types of services they received, whether they became homeowners within 18 months after starting counseling, and the circumstances that helped successful clients achieve homeownership. To accomplish these objectives, researchers collected information on 573 participants’ background characteristics, reasons for seeking counseling, services received over a 6-month period, and select housing outcomes approximately 18 months later.

The findings of this study suggest that counseling helped a relatively diverse group of low- to middle-income individuals obtain useful information. This study provides a snapshot of some pre-purchase counseling clients at 15 different housing counseling agencies across the country in fall 2009. Because this study was exploratory, its findings should be considered qualitative.

The study’s key findings include the following:

  • Within 18 months after seeking pre-purchase counseling, 35 percent of study participants had become homeowners. Participants who had become homeowners had higher average incomes, more savings, and higher credit scores than those who were not homeowners, and they were more likely than nonpurchasers to have full-time employment and a college degree.
  • Early indicators suggest that study participants who became homeowners could sustain homeownership. By the 18-month followup, only one purchaser’s mortgage was at least 30 days delinquent, and no purchaser had a major derogatory event on a mortgage account.
  • Most study participants were planning to purchase a home within a year (74%). More than half were seeking counseling to identify homebuyer assistance programs (58%) or to obtain downpayment or closing cost assistance or to qualify for a specific loan program (58%).
  • Most study participants started pre-purchase counseling early in the homebuying process; only 15 percent had a signed purchase agreement. In addition, most (66%) had not received any kind of housing counseling or financial education within the past 3 years; these participants received information on homeownership readiness, help with budgeting and improving credit scores, financing a home, and shopping for a home.
  • Most study participants were employed full time (81%), earned a median annual income of $30,000, and had little money in nonretirement savings or retirement accounts at the time they sought pre-purchase counseling services.
  • Study participants were racially and ethnically diverse: 52 percent were African American, 32 percent were White, 19 percent were Hispanic, and 16 percent were of another race or were multiracial. Just over half of study participants were under age 35 (51%); most were female (72%), had dependents under the age of 18 living with them (57%), and had some college education at the time of enrollment in counseling (66%).
  • Most purchasers had a FICO score of 620 or higher (71%), had a signed purchase agreement (31%), and were reported by their housing counselor as having completed counseling (72%) and as being “mortgage-ready” (66%).

These recent studies on pre-purchase and foreclosure counseling add to the body of research on housing counseling and, in the wake of the recent housing crisis, can help shape important policy discussions about the federal government’s role in supporting these programs.


The contents of this article are the views of the author(s) and do not necessarily reflect the views or policies of the U.S. Department of Housing and Urban Development or the U.S. Government.