Down Payment and Closing Costs for a Conventional 97 Loan

Down Payment and Closing Costs Overview

Conventional 97 loans require just 3% down — the lowest down payment option for a conventional mortgage. But, in addition to a downpayment, homeowners must also budget for their closing costs, which averaged 1.54% for conventional purchase loans in 2024.

Minimum Down Payment Requirement

The minimum down payment for a Conventional 97 loan is 3% of the home's purchase price.

Here are some example down payment amounts based on purchase price:

• $200,000 purchase price = $6,000 down
• $350,000 purchase price = $10,500 down
• $500,000 purchase price = $15,000 down

You can pay more than 3% if you wish, which will lower your loan amount, reduce PMI costs, and may improve your interest rate. Eventually, as the size of your down payment grows, you no longer need the Conventional 97 and can apply instead for a standard conventional mortgage.

For the full program overview, see our Conventional 97 Complete Guide.

Typical Closing Costs

Closing costs include the fees and expenses required to finalize your mortgage. For conventional mortgages, closing costs on a purchase range near 1.5%, historically. This is markedly less than the typical costs for USDA and FHA loans, which can approach 3–5%.

Closing costs can include any of the following:

• Lender origination and underwriting fees
• Appraisal fee
• Title insurance and settlement charges
• Recording fees
• Prepaid property taxes
• Prepaid homeowners insurance

Closing costs will vary by lender, so it's smart to get an estimate of your costs as part of your mortgage shopping process.

Conventional Mortgage Closing Costs by Year

Here's how closing costs have changed over time for conventional purchase mortgages:

Using Gift Funds

Gift funds are allowed for the full down payment and closing costs on a Conventional 97 loan, as long as they come from an eligible donor. This includes family members, a fiancé or domestic partner, an employer, or an approved nonprofit.

If you’re planning to use gift funds, you’ll need:

• A signed gift letter from the donor
• Proof of transfer from the donor’s account

See our full Gift Funds for Conventional 97 guide for details.

Seller Credits

With a Conventional 97 loan, buyers can use seller credits cover some or all of their closing costs. Seller credits are limited to 3% of the purchase price.

Buyers can use seller credits to offset:

• Lender origination and underwriting fees
• Title insurance and escrow services
• Prepaid items like property taxes or homeowners insurance
• Prepaid mortgage interest

However, seller credits cannot give you cash back at closing. The credits can pay for closing costs and prepaids but nothing else. For example, if your closing costs total $6,500 and the seller offers $8,000 to you, only $6,500 can be used. The extra $1,500 is not paid as cash out-of-pocket.

Seller Credit Examples

Down Payment Assistance

Many state and local programs offer down payment assistance in the form of grants or low-interest loans. Down payment assistance programs can be combined with the Conventional 97 to cover some or all of your required cash to close.

If you want to double-check you qualify while using assistance, review our Loan Requirements Guide.

Key Takeaway

Conventional 97 loans require 3% down plus closing costs, but the money doesn’t all have to come from your own savings. Gift funds, seller credits, and down payment assistance programs can all help reduce your out-of-pocket expense. If you’re still choosing between loan types, see our Conventional 97 vs FHA comparison.

Related Resource

For a full breakdown of all Conventional 97 rules — including credit, income, and property requirements — see our Loan Requirements guide.