Conventional 97

Conventional 97 home loan is a Fannie Mae back to low down payment mortgage requiring just 3% down. This is an ideal option for buyers looking for a low down payment mortgage not backed by FHA. Fannie Mae has two options, the HomeReady Mortgage and the Conventional 97.

The conventional 97 program is meant to help homebuyers who might qualify for a loan but just don’t have the down payment or even the desire to make a 5% down payment or more. This program was launched just a few years ago and is among the most demanded programs for today’s buyers.

Ideal for:

  • First time and repeat buyers.
  • Buyers with a minimum down payment of just 3%
  • A property that is a primary residence with a loan not exceeding $453,100.


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You will need to pay mortgage insurance premiums but they are typically less expensive than a comparable FHA home loan. With FHA, you are required to put down 3.5% but with the Conventional 97, the US government makes it easier for potential buyers to become homeowners.

If you choose to go with the Conventional 97, you will only need to come up with a 3% down payment, which then creates a mortgage balance of 97% loan to value. There are a few things that set this program apart from similar conventional programs. Although this is designed for both first-time buyers and repeat buyers, if you have owned a home in the last three years you do not qualify for the Conventional 97.

The Conventional 97 does not require applicants to complete a pre-purchase homeownership education class either, which a lot of FHA programs require.

Borrowers do not need perfect credit to qualify and underwriting standards are fairly forgiving. FHA purchase loans allow slightly lower borrower credit scores but they do require a higher down payment as well.


  • At least one of the borrowers must be a first-time homebuyer (or not have owned a home within the last three years)
  • Maintain a typical credit score of 680
  • No income limit
  • 43% debt to income ratio (no more than 43% of income can go towards debt)

The Conventional 97 program looks at how much of a borrower’s monthly income goes toward paying the debt. Lenders want to verify that borrowers are not over there had in terms of monthly expenses.

Loan Limits

A loan limit is the maximum loan amount available to borrowers who wish to take out a mortgage. They are typically set by the county or city in which you reside. Most counties that loan limit caps off at $453,100, but in high cost areas where the cost of living is much higher than typical counties, that limit is 679,000 $650,000.

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Loan Terms

  • Fixed rate mortgage
  • Up to 30 years
  • One unit (no duplexes)
  • Principal residence
  • Condos and co-ops and PUD’s are approved
  • Manufactured homes are not permitted.

Borrowers will also need to consider private mortgage insurance. This is insurance for the lender in case of default. Because there’s not enough equity into the home immediately after closing, lenders need to protect their asset with mortgage insurance. This will usually only be a few extra dollars a month added to your mortgage payments.

So, where can I get the down payment?

There are several ways to come up with the money required for a down payment. You may have your own reserves, gift funds, grants, cash, selling items or cashing out funds. However, you cannot take out a new loan just to pay for the down payment. This will add to your debt to income ratio.

If the Conventional 97 sounds like a program you’d like to consider, give us a call and let’s run some numbers. We can determine if this is a good program for your needs, your budget, and the future of your finances and homeownership possibilities.

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