What Are the 97% LTV Loan Options?

 97% LTV Loan Options

If you’re looking to purchase a home and don’t have much cash on hand for a down payment, you might want to look into a 97% LTV loan. Fortunately, Fannie Mae’s Conventional 97 mortgage program offers such a loan -- and it’s a pretty great option for a lot of home buyers.

Conventional 97 Home Purchase Requirements

Getting a loan with only 3% down sounds like a steal -- but there are some eligibility requirements and guidelines that you’ll have to meet. To qualify for a Conventional 97 home loan, you:

  • Must take out a fixed-rate loan

  • Cannot take out a loan of more than $453,100

  • Cannot purchase a multi-unit dwelling (i.e. duplex, triplex)

  • Must not have owned a home in the last 36 months

Credit and DTI Requirements for Conventional 97 Loans

The 3% minimum down payment requirement isn’t the only benefit of the Conventional 97 loan program; in addition, the program has a relatively liberal credit score requirement, with scores as low as 620 accepted. Despite that, borrowers with better credit scores may see a decreased interest rate.

When it comes to DTI (debt-to-income ratio), there is no specific requirement set by Fannie Mae. Despite that, most lenders set maximum DTI at 43%, so you’ll want to make sure you’re close to this before applying for a Conventional 97 loan.

Down Payments and Conventional 97 Loans

As we’ve already mentioned, you only need a 3% down payment to qualify for a Conventional 97 loan. But, you might not know that gift funds can also be used for your down payment. In fact, there is no minimum requirement on the amount of personal funds that need to be put down for a Conventional 97 loan.

While the 3% down payment is one of the main benefits of Conventional 97 loans, you can always decide to put down more if you choose. For example, by putting down 5% on a Conventional 97 loan, you could save an estimated $60 a month, or $720/year, on a $250,000 home.

PMI and Conventional 97 Loans

Unlike some kinds of government-backed mortgages, like FHA loans, you can cancel the private mortgage insurance (PMI) on a Conventional 97 home loan after you build up 20% home equity. While it might take you a while (especially if you’re putting down the minimum 3% down payment), being able to cancel PMI can lead to substantial savings in the long run.


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