View All Learning Articles
Is April 2024 a Good Time to Buy a Home?
The 100% HELPER Act Mortgage
The $25,000 Downpayment Toward Equity Cash Grant
The Biden $15,000 First-Time Homebuyer Tax Credit
$10,000 First-Time Home Buyer Mortgage Relief Credit
14 Grants & Programs for First-Time Home Buyers
View All Research Articles
170+ Mortgage Statistics
Generational Home Buyer Statistics
Annual HMDA Home Buyer Study
Most Popular Places for Vacation Homes In Every State
Gen Z Home Buyer Distribution By Location
Younger Millennial Home Buyer Distribution By Location
Older Millennial Home Buyer Distribution By Location
ZIP Code Invasions: Gen Z
ZIP Code Invasions: Younger Millennials
ZIP Code Invasions: Older Millennials
Dan Green
Since 2003, Dan Green has been a leading mortgage lender and respected industry authority. His unwavering commitment to first-time home buyers and home buyer education has established him as a trusted voice among his colleagues, his peers, and the media. Dan founded Homebuyer.com to expand the American Dream of Homeownership to all who want it. Read more about Dan Green.
How We Make Money
Homebuyer.com is your trusted guide to homeownership. Since 2003, our team has offered real-world expertise and advice to tens of millions of U.S. home buyers. Our content stands on its integrity: it's factual, unbiased, and free from outside influences. Read our editorial guidelines.
Homebuyer.com is a mortgage-company-affiliated publisher. We earn compensation when you click specific links on the website, or apply for a mortgage with Homebuyer.com or a partner listed in our comparison tables. Our partners compensate us differently, so we randomize our tables to protect our readers from steering. We may also earn compensation for advertisements on the site, which are indicated clearly. Note that limitations in our software, whether we originate mortgages in your area, and credit factors may affect the offers and comparison tables you see on various parts of this site. We do not include offers for every mortgage product available. Someday, we hope we will.
Trusted Content
This article was checked for accuracy as of February 7, 2024. Homebuyer.com ensures every piece of information we share reflects the latest in mortgage standards. Learn more about our commitments in our editorial guidelines.
This guide to Conventional 97 vs FHA mortgages compares two popular low-down-payment mortgage loans side-by-side. Use this comparison to decide which low-down payment mortgage choice is most suitable for your upcoming home purchase.
The Conventional 97 and the FHA mortgage are low-down-payment mortgage options. Each has a rarely used official name – the 97 LTV mortgage and the FHA 203(b), respectively – but that’s where their similarities end.
The Conventional 97 is a low-down-payment mortgage for first-time home buyers offered by Fannie Mae. The “97” in its name is shorthand for 97% loan-to-value, reflecting the program’s minimum 3 percent down payment requirement.
Key features of the Conventional 97 mortgage include:
FHA mortgages are mortgages backed by the Federal Housing Administration’s mortgage insurance program. More appropriately, they should be called FHA-insured mortgages because the FHA’s Mutual Mortgage Insurance Fund currently insures 7.5 million FHA mortgages against loss for their lenders.
Key FHA loan features include:
Mortgage underwriting is more lenient for FHA loans than Conventional 97 mortgages, especially for home buyers with less-than-perfect credit.
Loan Feature | Conventional 97 | FHA |
Minimum Loan Size Allowed | None | None |
Maximum Loan Size Allowed | See Loan Limits | See Loan Limits |
Maximum Household Income Allowed | No Restrictions | No Restrictions |
Minimum Credit Score Required | 620 | 500 |
Debt-to-Income Maximum - Standard | 50.00% | 43.00% |
Debt-to-Income Maximum with Compensating Factors | 50.00% | 50.00% |
Minimum Downpayment Required | 3.00% | 3.50% |
Maximum Loan-To-Value Allowed | 97.00% | 96.50% |
Maximum Combined Loan-to-Value Allowed | 1.05 | 1.25 |
First-Time Homebuyer Education Required | Yes | No |
Minimum Age Allowed | Minimum Legal Age | Minimum Legal Age |
Maximum Age Allowed | None | None |
First-Time Home Buyers Allowed | Yes | Yes |
First-Time Home Buyers Only | Yes | No |
Low-Down Payment Mortgage Classification | Yes | Yes |
Income Verification Required | Yes | Yes |
Military Service Required | No | No |
States Allowed | All States | All States |
Homeowners Insurance Required | Yes | Yes |
Escrow Taxes & Insurance Required | Recommended | Yes |
Loan Feature | Conventional 97 | FHA |
Average Interest Rate: Last Year | Not Tracked | 4.99% |
Average Loan Size: Last Year | Not Tracked | $279,773 |
Average Approval Rate: Last Year | Not Tracked | 75.02% |
Market Share: Last Year | Not Tracked | 17.97% |
Purchase Mortgages Originated: Last Year | Not Tracked | 887,234 |
Loan Feature | Conventional 97 | FHA |
1-Year ARM Available | No | Yes |
5-Year ARM Available | No | Yes |
10-Year Fixed-Rate Mortgage Available | Yes | Yes |
15-Year Fixed-Rate Mortgage Available | Yes | Yes |
20-Year Fixed-Rate Mortgage Available | Yes | Yes |
25-Year Fixed-Rate Mortgage Available | Yes | Yes |
30-Year Fixed-Rate Mortgage Available | Yes | Yes |
Temporary Buydowns Available | Yes | Restricted |
Loan Feature | Conventional 97 | FHA |
Funding Fee / Guarantee Fee | No | No |
Upfront Mortgage Insurance Premium | No | Yes |
Annual Mortgage Insurance Premium | No | Yes |
Private Mortgage Insurance | Yes | No |
Loan Feature | Conventional 97 | FHA |
Primary Residence | Yes | Yes |
Second Home | Yes | Restricted |
Vacation Home | Yes | No |
Investment Property | Yes | No |
Non-Occupant Co-Borrower | Yes | Yes |
Loan Feature | Conventional 97 | FHA |
U.S. Citizen Allowed | Yes | Yes |
Permanent Resident Alien Allowed | Yes | Yes |
Non-Permanent Resident Alien Allowed | Yes | Yes |
Foreign National Allowed | Yes | Yes |
Buyers With Diplomatic Immunity Allowed | Yes | Yes |
Loan Feature | Conventional 97 | FHA |
Credit Scoring Model | Tri-merge | Tri-merge |
Non-Traditional Credit References Allowed | Yes | Yes |
Deferred Student Loans | Lesser of 5% of balance or monthly payment | Actual Payment or 0.5% of Loan Balance |
Deferred Debt Calculation | Lesser of 5% of balance or monthly payment | Lesser of 5% of balance or monthly payment |
Pay Off Medical Collections Prior To Closing | No | Not Required |
Pay Off Non-Medical Collections Prior To Closing | No | Required when collections exceed $2,000 |
Bankruptcy, Chapter 7 | 4-year waiting period | 2-Year Waiting Period |
Bankruptcy, Chapter 13 | 4-year waiting period | 1-Year From Filing |
Short Sale | 4-year waiting period | 3-Year Waiting Period |
Foreclosure | 7-year waiting period | 3-Year Waiting Period |
Judgments & Liens Allowed | Must be satisfied | Must be satified |
Federal Income Tax Delinquency Allowed | Must be satisfied | No |
Loan Feature | Conventional 97 | FHA |
Minimum Square Footage Allowed | No minimum | No minimum |
Maximum Square Footage Allowed | No maximum | No maximum |
Single-Family Residences Allowed | Yes | Yes |
Condominiums Allowed | Yes | Yes |
Non-Warrantable Condominiums Allowed | No | No |
Co-ops Allowed | No | Yes |
Townhomes Allowed | Yes | Yes |
2-4 Unit Homes Allowed | Yes | Yes |
Manufactured Homes Allowed | Yes | Yes |
Fraternity and Sorority Houses Allowed | No | No |
Tiny Homes Allowed | Yes | Yes |
Modular Homes Allowed | Yes | Yes |
Cob Homes Allowed | Yes | No |
Shipping Container Homes Allowed | Yes | Yes |
Condotels Allowed | No | No |
Bed & Breakfast Allowed | Yes | No |
Working Farms Allowed | Yes | No |
Working Ranches Allowed | Yes | No |
Houseboats Allowed | No | No |
Log Homes Allowed | Yes | Yes |
Geodesic Homes Allowed | Yes | No |
Timeshares Allowed | No | No |
Homes with Solar Panels Allowed | Yes | Restricted |
3-D Printed Homes Allowed | Yes | No |
Leasehold Estates Allowed | Yes | Yes |
Mixed-Use Properties Allowed | Yes | Yes |
Flood Zones Allowed | Yes | Only where insurable |
Properties With More Than 20 Acres Allowed | Yes | Yes |
Properties with PACE Allowed | Must be subordinated | No |
Loan Feature | Conventional 97 | FHA |
Inter Vivos Revocable Trust Allowed | Yes | Yes |
Closing in a Corporation Allowed | No | Yes |
Community Land Trust Allowed | Yes | Yes |
Non-Profit Organizations Allowed | No | Yes |
Municipal Government Agencies Allowed | No | Yes |
Loan Feature | Conventional 97 | FHA |
W-2 Income Allowed | Yes | Yes |
Self-Employment Income Allowed | Yes | Yes |
Investment Income Allowed | Yes | Yes |
Retirement Income Allowed | Yes | Yes |
Trust Income Allowed | Yes | Yes |
Social Security Income Allowed | Yes | Yes |
Military Income Allowed | Yes | Yes |
Rental Income Allowed | Yes | Restricted |
Asset Depletion as Income Allowed | Yes | No |
Offer Letter Income Allowed | Yes | No |
Disability Income Allowed | Yes | Yes |
Alimony and Child Support Income Allowed | Yes | Yes |
Boarder Income Allowed | Yes | Restricted |
Accessory Dwelling Unit Income Allowed | Yes | Yes |
Cannabis Industry Income Allowed | Yes | No |
Automobile Allowance as Income Allowed | Yes | Yes |
Housing Allowance as Income Allowed | Yes | Yes |
Temporary Leave Income Allowed | Yes | Restricted |
Bank Statements as Income Allowed | No | No |
Debts Paid By Others as Income Allowed | Yes | No |
Loan Feature | Conventional 97 | FHA |
Seasoning Requirements | 60 days | 30 Days |
Reserves Required | No | No |
Cash Gift For Downpayment Allowed | No | Yes |
Seller Concessions, Maximum | 3.00% | 6.00% |
Salary Advance for Downpayment Allowed | No | No |
Relocation Funds for Downpayment Allowed | Yes | Restricted |
Gift of Equity Allowed | Yes | Yes |
Sweat Equity Allowed | Yes | Yes |
Crypto for Downpayment Allowed | Yes | Restricted |
Cash Value For Credit Card Rewards Allowed | Yes | No |
Cash Value For Airline Rewards Allowed | Yes | No |
Loan Feature | Conventional 97 | FHA |
Assumable Mortgage Allowed | No | Yes |
Trailing Co-Borrower Allowed | Yes | Yes |
Maximum Properties Financed Allowed | 2 | 1 |
Flipped Homes Allowed | Yes | Restricted |
Arms-Length Transaction Required | No | No |
Occupancy Deadline | 60 days | 60 days |
Delayed Financing Allowed | Yes | No |
Prepayment Penalty Allowed | No | No |
Termite Inspection Required | No | Yes |
Power of Attorney Allowed | Yes | Yes |
Repair Allowances Allowed | Yes | No |
Gifts From Charitable Organizations Allowed | No | No |
This mortgage comparison between the Conventional 97 and FHA mortgages is based on current mortgage guidelines published by Fannie Mae and the FHA and is subject to change when mortgage guidelines change.
Mortgage lenders may apply lender overlays to the official mortgage guidelines, affecting mortgage underwriting and your ability to get approved.
If one lender turns down your Conventional 97 or FHA mortgage application, it does not mean that all mortgage lenders will turn down your application. Getting approved with another lender may be possible.
Consult with multiple lenders about your mortgage rates and choices.
Want to make an informed decision? Visit our comprehensive Conventional 97 and FHA mortgage guide pages. And when you’re ready to move forward, start your mortgage pre-approval at Homebuyer.com.
Pre-approved buyers do better. Get started now.
This article, "Conventional 97 vs FHA: Compare Side by Side" draws on the author's professional mortgage experiences and references information found at these authoritative websites:
Wave goodbye to waiting times and say hello to our Immediate Mortgage Approval. It's more than just a mortgage - it's your ticket to home-buying freedom, available anytime you are. With ultra-low rates at your fingertips, the power to secure your future is just a click away. Why wait for office hours? Your home doesn't.
Recent Mortgage News
Mortgage Rates Haven’t Slowed Home Buyers – April 26, 2024
WOW Inflation Is Hotter – April 25, 2024
New Construction Homes On Overstock? – April 24, 2024
Home Buyers Have 7% Less Power This Month – April 23, 2024
What On Earth Day Is Going On With Mortgage Rates? – April 22, 2024
HomeReady vs Home Possible: Compare Side-by-Side
This guide to Conventional 97 vs FHA mortgages compares two popular low-down-payment mortgage loans side-by-side.
Be a better buyer. Subscribe now and never miss out on exclusive insights, new market trends, and first-time buyer programs.
Finding your dream starts here. Apply in minutes.
About
Learn
Research