What Is a Conventional 97 Loan?
The Conventional 97 is a Fannie Mae and Freddie Mac loan program that allows first-time homebuyers to purchase with just 3% down. Unlike HomeReady and Home Possible, there are no income limits — any first-time buyer can use this program regardless of earnings. At least one borrower must be a first-time buyer (has not owned a home in the past three years).
This is a standard conventional loan with private mortgage insurance (PMI) that cancels once you reach 80% loan-to-value. It carries standard PMI rates (not reduced), but the absence of income limits makes it accessible to a broader range of buyers.
First-time buyer definition: You are a first-time buyer if you have not owned a home in the past three years. If you owned a home five years ago but not in the last three, you qualify.
Who Conventional 97 Is For
- First-time homebuyers who earn too much for HomeReady or Home Possible
- Buyers who want 3% down without income restrictions
- Borrowers with 620+ credit purchasing a primary residence
Key Features
Minimum 620 credit score. Maximum 50% DTI. One borrower must be a first-time buyer. Single-family homes, condos, co-ops, and PUDs eligible. 100% of the down payment can come from gift funds. Standard PMI applies and cancels at 80% LTV. Available as 15-year or 30-year fixed.