You’d use a Good Faith Estimate (GFE) when you apply for certain types of mortgage-related loans, and you must disclose it for transactions like reverse mortgages and some home equity lines of credit (HELOCs).

What a Good Faith Estimate Is

A Good Faith Estimate is a disclosure form that outlines the estimated loan terms and closing costs for a mortgage-related loan, so the borrower can see fees, interest terms, and other charges in advance. It is meant to promote transparency and help borrowers compare different lenders’ offers more easily.

The Type of Transaction in Your Question

In the context of typical test or training questions about GFEs, the “what type of transaction” item is usually pointing to specific mortgage products that still use a GFE form. For that style of question, the correct choice is:

  • Reverse mortgages and HELOCs (“Both a and b”).

These products are exceptions because newer disclosures (like the Loan Estimate/Closing Disclosure) replaced the old GFE for most standard mortgage loans, but reverse mortgages and certain HELOCs still rely on the Good Faith Estimate format.

Why This Transaction Needs a GFE

  • The lender must disclose estimated closing costs and loan terms early in the process, giving the borrower a chance to understand total costs before committing.
  • The borrower can then compare multiple lenders’ GFEs to see who offers more favorable fees and terms on the reverse mortgage or HELOC.

Mini “Forum Style” Take

“If a quiz asks: ‘What type of transaction could you do that you’d have to disclose using a Good Faith Estimate?’ the ‘gotcha’ is that reverse mortgages and HELOCs are the ones still tied to the GFE world, while most regular mortgages now use newer disclosure forms instead.”

TL;DR: The transaction you’d have to disclose using a Good Faith Estimate is a reverse mortgage or certain HELOCs — so the test-style answer is ‘Both a and b.’

Information gathered from public forums or data available on the internet and portrayed here.