Connect With Us:

Loan Programs:

Conventional Loan

FHA Loan


VA Loan

Conventional Loan Programs

Conventional 97 Loan-3%
HomeOne (3%)
Homepath (foreclosures)
HomeReady Loan (3%)
Home Possible Loan (3%)

HomeStyle Renovation

Do Conventional Loans Require PMI?

Loan Limits in PA 2023

Seller Paid Closing Costs

Underwriting Manual

Fannie Mae

Return to menu

Conventional 97 loan: Only 3% down payment

Happy familyThe Conventional 97 loan is a home loan provided by Fannie Mae that enables borrowers to obtain a mortgage with only a 3% down payment. This low down payment loan allows homebuyers to borrow up to 97% of the home's value, also known as the Loan-To-Value (LTV) ratio.

To qualify for this Conventional 97 loan, borrowers usually need a
credit score of 620 or higher. This mortgage program is highly sought after because of its low down payment and low LTV requirements, making it an attractive proposition for many homebuyers. 

Fannie Mae and Freddie Mac offer conventional loans, including the Conventional 97 loan. One of the key benefits of this program is that borrowers can avoid paying Private Mortgage Insurance (PMI), which is often required when making a down payment of less than 20%.

The Conventional 97 loan has slightly different loan requirements than the standard 97 LTV mortgage, but they still fall within the conventional mortgage loan category. 

Overall, the Conventional 97 loan is an excellent option for those looking for low-down payment loan products from Fannie Mae. With this program, homebuyers can obtain 97 LTV mortgages while avoiding PMI and enjoying other advantages of a conventional mortgage loan.

First-time Home Buyer

The Fannie Mae conventional 97 mortgage program offers first-time buyers an opportunity to purchase a home with flexible underwriting guidelines and lower credit score requirements. To qualify for this mortgage program, applicants must meet the definition of a first-time homebuyer, which means they haven't owned a residential property in the previous three years.

This first-time homebuyer program is an affordable option that offers fixed-rate mortgages with conforming loan limits set by the Federal Housing Finance Agency (FHFA). The conventional 97 mortgage program allows for lower down payments with only a 3% down payment requirement. The program also features affordable mortgage insurance premiums that can be canceled when borrowers reach at least 20% equity in their home.

If you have an existing Fannie Mae loan, you may still be eligible for the conventional 97 programs, provided you meet the program's requirements. Homeownership can be achieved with this mortgage program, which is designed for those who are looking for a more affordable option to purchase a home.

Qualifying for a Conventional 97 Loan

If you are looking for home financing options or home-buying assistance, a Conventional 97 loan may be a good choice. This government-backed loan requires a low down payment of only 3% and has a loan-to-value ratio of up to 97%. You may qualify for this loan even if you have had some credit issues or your credit score is as low as 620. 

Unlike HomeReady, this loan does not require homeownership opportunities or home purchase assistance and allows borrowers to own any property they wish.

Additionally, borrowers can have owned a home in the past three years and still be eligible. However, credit requirements still apply, and it is essential to have a good credit score to obtain approval for this low down payment mortgage.

Credit Score

To qualify for a Conventional 97 mortgage, Fannie Mae requires borrowers to meet the standard minimum credit score of 620 or higher. A 3% or more down payment will not impact the minimum credit score.

The Loan-to-Value (LTV) ratio must be 97% or less for a conventional 97 loan to be granted. To qualify, the buyer must have a credit score of 620 or higher, and the LTV ratio must be lower than 97%. Fannie Mae also notes that other qualifying requirements must be met to receive the loan.

Debt-to-Income Ratio

When it comes to a Conventional 97 loan, the debt-to-income ratio is an essential factor lender consider when determining eligibility. To qualify for a Conventional 97 home loan, your debt-to-income ratio must not exceed 45%.

Your debt-to-income ratio is calculated by dividing your total monthly debt by your gross income. Fannie Mae allows for a maximum loan-to-value (LTV) ratio of 97% on Conventional 97 mortgages, meaning a 3% down payment is required for most borrowers. This makes it easier for homeowners to buy a home with a low down payment than conventional mortgages.

Income limits

There are no income limits with the Conventional 97 loan.

Property Type

When applying for a Conventional 97 Loan, it's essential to understand the restrictions relating to the property type. The 97 loan is available for owner-occupied residences, including a single-family home, a townhome, or a condominium. The 97 loan is not available for second homes or investment properties.

Additionally, the 97 loans are backed by Fannie Mae, so it has a maximum loan-to-value (LTV) of 97%, meaning the loan amount cannot exceed 97% of the appraised value of the home. The buyer must come up with at least 3% of the purchase price as a down payment and have a credit score of at least 680.

Down Payment

When qualifying for a Conventional 97 loan, borrowers must pay at least a 3% down payment. This is a lower down payment requirement than most conventional mortgages, which traditionally require a minimum of 5% to 20% down. Fannie Mae, the government-sponsored entity behind the Conventional 97 loan, created this loan to make it easier for first-time home buyers to qualify for a loan with a lower down payment.

The loan-to-value (LTV) ratio on a Conventional 97 mortgage is 97%, meaning a borrower can finance 97% of the home's purchase price. This is significantly higher than most other conventional home loans.

Advantages and Disadvantages of a Conventional 97 Loan

The Conventional 97 loan is a new version of the traditional Fannie Mae mortgage requiring a 3% down payment. There are advantages and disadvantages to obtaining this type of home loan.

Advantages of the Conventional 97 loan include the low 97% Loan-to-Value (LTV) ratio required to qualify, which is much lower than a traditional mortgage. This loan also provides greater flexibility regarding credit score requirements, allowing for scores as low as 620. It also offers ultra-low mortgage insurance premiums and the ability to waive the requirement for mortgage insurance altogether.

On the other hand, this loan also has some drawbacks. Borrowers are not eligible for a Conventional 97 loan if their credit scores are below 620 or their debt-to-income ratio is too high. Additionally, buyers are limited in terms of the home types that can be purchased with this loan, as it does not allow for purchasing investment properties, second homes, or homes that need repair.

Overall, the Conventional 97 loan provides an affordable option for borrowers who want to purchase a home with a small down payment. It is essential, however, to weigh the advantages and disadvantages of this loan before making any final decisions.

Alternatives to the Conventional 97 Loan

There are various low-down payment mortgages you can consider. Fannie Mae offers low-cost mortgage options such as HomeReady® and Conventional 97 mortgages, with reduced mortgage insurance premiums. These loan options are considered low-risk mortgage options. The HomeReady® mortgage is available to those who meet specific eligibility requirements, which include using the property as your primary residence. Conventional 97 loans, on the other hand, are for those who haven't owned a home in the past three years.

Similarly to FHA loans, mortgage insurance is required with these types of mortgages to protect the lender. However, compared to FHA loans, mortgage insurance premiums tend to be lower. This means you can make a down payment without needing a large sum of money upfront, which can be ideal if you are struggling to save for a substantial down payment.

It's important to note that these low-down payment options may not be available to everyone. You'll need to meet specific criteria, such as having a good credit score and a track record of paying your bills on time. Additionally, if you've owned a property in the last few years, you may not qualify for these types of mortgages.


In conclusion, the Conventional 97 loan is an attractive mortgage option for those interested in putting a minimum down payment of just 3%. Qualification criteria for this loan include a credit score of at least 620, a maximum debt-to-income ratio of 45%, and a single-family residential property.

Although this loan has benefits, such as the low down payment, there may also be some drawbacks, such as the stringent requirements that must be met to qualify. If these conditions are not met, other options, such as FHA loans, VA loans, and USDA loans, offer lower down payments and may be more suitable. Ultimately, choosing which loan best suits you and your financial situation are up to you.


Recommended Reading
Conventional Loans in PA: Homebuyer Requirements
Get the Facts About Private Mortgage Insurance in PA
Do Conventional Loans Have PMI?

If you found this information useful, please tell a friend.