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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.
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Conventional 97 is the generic name for Fannie Mae’s and Freddie Mac’s three percent down, 30-year fixed rate mortgage loan for first-time home buyers.
The name describes the mortgage.
Conventional 97 is a conventional mortgage loan that allows up to 97 loan-to-value (LTV). It’s the counterpart to HomeReady and HomePossible, which also allow three percent down but which Fannie Mae and Freddie Mac reserve for low- and moderate-income households. There are no income limitations with Conventional 97.
Conventional 97 is sometimes called 97% LTV Standard.
The Conventional 97 is Fannie Mae’s and Freddie Mac’s mortgage with the smallest allowable down payment. It’s the default mortgage choice for many first-time buyers. A separate application is not required.
Here are the requirements to use Conventional 97 to buy a home:
Conventional 97 is for first-time home buyers. At least one person on the mortgage application must be a first-time buyer. Fannie Mae and Freddie Mac define first-time home buyer as a person who has not owned a percentage of any residential property in the last 36 months.
Conventional 97 requires that buyers make a three percent down payment, which may come from any eligible source. Eligible sources include savings, government down payment assistance programs, cash gifts from family or friends, cash grants, and loans.
Conventional 97 is for primary residences only. The program cannot be used to purchase a second home, a short-term rental property, or an investment property of any kind.
Conventional 97 is for single-family residences which includes townhomes, condominiums, and rowhomes. Manufactured homes may be eligible. Homes with 2 or more units and commercial properties are ineligible.
Conventional 97 is a conforming mortgage program, which means that buyers and their applications must fall within conforming mortgage standards. Loan sizes may not exceed local conforming mortgage loan limits, buyers must provide proof of income and evidence of down payment, and loans may not be interest-only.
Conventional 97 requires a minimum credit score of 620. Fannie Mae and Freddie Mac use the FICO credit scoring system, which ignores medical debt and collections.
Fannie Mae requires that first-time home buyers complete a homeownership education course prior to closing. Fannie Mae makes an online educational course available at no cost which satisfies the requirement. Homeownership education reduces mortgage default risk.
Conventional 97 is the catch-all conventional mortgage for low-down payment buyers. Similar to the FHA mortgage, it’s available in all 50 states and to home buyers of all income levels.
Conventional 97 | Home Possible | HomeReady | FHA | |
Min. Down Payment | 3% | 3% | 3% | 3.5% |
Min. Credit Score | 620 | 660 | 620 | 580 |
First-Time Buyers | Yes | Yes | Yes | Yes |
Income Limitations | None | Yes | Yes | None |
Boarder Income | Allowed | Not Allowed | Allowed | Allowed |
ADU Income | Not Allowed | Not Allowed | Allowed | Not Allowed |
PMI Discounts | No | Yes | Yes | No |
Homeownership Education | Required | Required | Required | Not Required |
Single-Family Homes | Allowed | Allowed | Allowed | Allowed |
Multi-Unit Homes | Not Allowed | Allowed | Allowed | Allowed |
Occupancy Rules | Main Residence | Main Residence | Main Residence | Main Residence |
The Standard 97 LTV is one of seven government-backed, low down payment mortgage loans. It’s a lower-cost alternative to FHA-backed mortgages for first-time buyers with good income and better-than-average credit scores.
However, the Conventional 97 isn’t the best mortgage choice for everyone.
If you decide that the Conventional 97 mortgage won’t meet your needs, here are other home mortgage options for first-time home buyers:
First-time home buyers may also be eligible for home buyer tax credits and local down payment assistance from their state.
Get pre-approved to check your eligibility.
Conventional 97 is a purchase mortgage program for first-time home buyers. At least one mortgage applicant must be a first-time buyer.
Home buyers must have a mortgage credit score of at least 620 to use the Conventional 97 loan. Buyers without a credit score may also qualify.
No, Conventional 97 is a conventional mortgage loan which means it’s backed by Fannie Mae or Freddie Mac. FHA mortgages are backed by the Federal Housing Administration.
No, Conventional 97 is not a home affordability mortgage like HomeReady and Home Possible, Conventional 97 doesn’t discount mortgage rates for home buyers, and doesn’t offer reduced mortgage insurance rates.
Unlike HomeReady and Home Possible, Conventional 97 doesn’t limit who qualifies based on income. All first-time home buyers may be eligible.
There’s no difference between the Conventional 97 and Standard 97 LTV mortgages. They are the same. Conventional 97 is a branded name for the standard mortgage product.
Yes, home buyers can make a down payment of more than 3 percent with the Conventional 97 loan. However, once a buyer increases its down payment to five percent, standard mortgage financing applies and the Conventional 97 isn’t needed.
Yes, the Conventional 97 is available from every mortgage lender that offers conventional mortgage financing.
Yes, the Conventional 97 mortgage is available to all home buyers, irrespective of income. Low- and moderate-income households are eligible and high-income earnings are eligible, too.
Yes, Conventional 97 is for first-time home buyers only. Repeat buyers may use other low down payment mortgage loans including HomeReady, Home Possible, FHA, USDA, or VA.
Conventional 97 is not better or worse than an FHA-backed mortgage but it may be a better or worse option for your personal situation. See which low down payment is best for your needs. Get pre-approved now.
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Mortgage Rate Assumptions
The Homebuyer.com mortgage rates shown on this page are based on assumptions about you, your home, and the state where you plan to purchase. The rate shown is accurate as of , but please remember that mortgage rates change without notice based on mortgage bond market activity.
The Homebuyer.com mortgage rates shown on this page are based on assumptions about you, your home, and the state where you plan to purchase. The rate shown is accurate as of {{ formatDate(rates[0].createdAt) }}, but please remember that mortgage rates change without notice based on mortgage bond market activity.
Our mortgage rate assumptions may differ from those made by the other mortgage lenders in the comparison table. Your actual mortgage rate, APR, points, and monthly payment are unlikely to match the table above unless you match the description below:
You are a first-time buyer purchasing a single-family home to be your primary residence in any state other than New York, Hawaii, and Alaska. You have a credit score of 660 or higher. You are making a down payment of twenty percent and using a 30-year conventional fixed-rate mortgage. You earn a low-to-moderate household income relative to your area.
The information provided is for informational purposes only and should not be confused for a mortgage rate commitment or a mortgage loan approval.
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