Conventional 97 Loan: What It Is & How to Get

Are you in the market for a new home? Have you heard of the Conventional 97 loan? This loan is an increasingly popular mortgage option for those looking to finance their new home. It offers several potential benefits, such as a lower down payment and fewer fees than other types. 

It is also typically easier to qualify for. Interested in learning more about the Conventional 97  loan and how to get one? Read on to find out more about this mortgage option and how it can help you purchase your dream home.

Do You Need Cash Immediately?

Fill out a request form to get money fast!

Get Money

What Сonventional 97 Loan Program Is

Conventional 97 Loan

The Conventional 97 loans program is a mortgage program offered by Government Sponsored Enterprises (GSE): Fannie Mae and Freddie Mac. It is designed to help homebuyers with good credit and a steady income to purchase a home.

The program allows for a down payment of just 3%, which is much lower than the 5.25% to 5.875% required by most conventional programs. The program is also used as an alternative to the 3.5% down payment of FHA loans.

The Conventional 97 also allows borrowers to finance more of the purchase price of their home, which can lead to lower monthly payments. The combined loan-to-value ratio must be no more than 97% and must not exceed the Fannie Mae or Freddie Mac loan limits.

How Conventional 97 Loan Works

Conventional 97 loans are a great mortgage option for low- to moderate-income first-time home buyers. This kind of mortgage allows you to put just 3% down when purchasing a home, which is much less than the typical down payment.

Here’s how it works: first, you’ll need a minimum of 620 as your credit score and a debt-to-income ratio of 43% or lower. Then, you’ll need to be able to make a down payment of at least 3%.

After that, you’ll need to be able to meet all closing costs, including taxes and insurance. Finally, the amount must be within the conforming loan limits set by Fannie Mae and Freddie Mac.

Conventional 97 Loan Requirements 2024

The Conventional 97 loan is a great option for home buyers who don’t have a large down payment saved up. It allows for a down payment of 3%, which is much lower than what is typically required for a conventional mortgage loan.

As of 2024, there are several key requirements potential home buyers must meet in order to be approved for a Conventional 97:

  • Borrowers need to live in the home they’re buying 
  • Have a FICO score of at least 620
  • Be first-time buyers
  • Attend a homeownership education class
  • Mortgage must be fixed rate
  • An approval as a conforming mortgage is required
  • Must be an owner-occupied single-family home

Additionally, the property must be appraised and the funding must meet certain income requirements. 

Types of Conventional 97 Loans

Conventional 97 loans are a popular choice for home buyers. They are a type of mortgage that allows borrowers to put just a 3% down payment. This form of lending is backed by Fannie Mae and Freddie Mac and makes it easier for borrowers to qualify with a low down payment.

They are a great option for those who don’t have a lot of money saved up for a down payment. But it’s important to understand the differences between each type of loan and the terms they offer so that you can make an informed decision.

Explained below are the details of conventional mortgage 97 loans so that you can decide if this is the right one for you.

Fannie Mae HomeReady

Fannie Mae HomeReady is a mortgage program designed to help low- to moderate-income families become homeowners. It offers a range of benefits, including 3% (compared to FHA 3.5%) down payment requirements, flexible income criteria, and access to financing for multi-generational households.

HomeReady is also designed to help borrowers build equity and wealth. The program is designed to help people in underserved communities access home financing and offers a 0.25% points discount on below-average rates.

To qualify for HomeReady, borrowers must demonstrate reliable income, with a 50% debt-to-income limit and a 620 credit score.

In addition, homeowners must complete one of Fannie Mae’s homebuyer education courses to understand the responsibilities of homeownership better. With HomeReady, Fannie Mae is helping to create a more equitable and sustainable housing market.

With this program, more families can become homeowners and build wealth, creating a more stable and prosperous future.

Home Equity Loans

Fannie Mae 97% LTV Standard

The Fannie Mae 97% LTV Standard is an important program for homeowners who are looking to purchase a home but lack the necessary funds. This program offers the ability to purchase a home with a down payment of just 3%, making it much easier for low-income earners to become homeowners.

The 97% LTV Standard is available for both first-time and repeated homebuyers, and it also allows for a higher debt-to-income ratio (45% to 50%) than the Fannie Mae HomeReady. This program also comes with additional benefits, such as reduced mortgage insurance premiums and potential lender credits.

It’s critical to note, however, that there are still certain restrictions and requirements that must be met in order to qualify.

For example, potential homeowners are required to earn less than 80% of the area’s median income. For Fannie Mae to protect itself from financial loss in the event the borrower does not repay the debt, private mortgage insurance (PMI) will be required.

Freddie Mac Home Possible

Freddie Mac Home Possible is a great option for borrowers looking to purchase a home. This program provides an affordable mortgage option for low- to moderate-income borrowers.

With Home Possible, even high-income homes can get approved with as little as 3% down as long as they are earning 80% less than their neighbors.

Plus, you can get reduced insurance fees and interest rates. Home Possible also allows you to finance up to 97% of the property value, so you don’t have to put down a large down payment. However, the borrower cannot have another mortgaged property.

With more stringent credit requirements (660) than the Fannie Mae alternative, you can get approved even if you have less-than-perfect credit. Finally, you can use this loan for a wide range of property types, from single-family homes to condos, townhomes, and even manufactured homes.

Freddie Mac HomeOne

Freddie Mac HomeOne is a mortgage program designed to help first-time homebuyers purchase a home. This program offers low down payment options, flexible credit requirements, and competitive mortgage rates. It’s designed to make the buying of single homes, including condos and townhouses, easier for first-time buyers.

As with the other programs on this list, potential homeowners will only need to provide a 3% down payment, with no income limits and a loan-to-value of 105%. HomeOne offers a conventional 30-year fixed-rate mortgage and requires automated underwriting.

It allows for down payment assistance from other sources, such as government programs or gifts from family or friends. Borrowers will also need to take part in the first-time homebuyer online course. 

How To Apply For Conventional 97

The Conventional 97 program is a great option for homebuyers who have a solid credit score and a down payment of at least 3%. Applying is straightforward, but it’s important to understand the steps involved.

  • The first step is to contact a loan officer at your local bank or credit union. You’ll need to provide information such as your annual income, assets, and debts. The officer will then help you determine if the Conventional 97 program is right for you.
  • Next, you’ll need to gather all the necessary documents required for an application. This includes proof of income, tax returns, bank statements, and other documents. Your loan officer can provide you with a full list of what you need.
  • Once you have all the documents ready, you’ll need to submit them to the officer. They will review the documents to make sure everything is in order. They’ll also run a credit check and assess your risk as a borrower.
  • If everything looks good, you’ll be ready to apply. You’ll have to fill out an application and sign all the relevant paperwork. Once that’s done, you’ll need to wait for the loan to be approved.

Who Is Ideal Conventional 97 Borrower

Who Is Ideal Conventional 97 Borrower?

The Conventional 97 loans are an attractive option for many potential homebuyers, but they’re not the right fit for everyone. The ideal borrower is someone with a good credit score, a steady job, and a sufficient down payment.

They are best for first-time home buyers or those with low-to-moderate income levels.

The Conventional 97 is also an excellent choice for buyers who have enough funds for a down payment, as it only requires a minimal 3% down. Because of this, these buyers have the benefit of lower monthly payments and no private mortgage insurance.

They are federally backed, meaning that they give buyers access to more competitive interest rates. This can be especially helpful for those looking to save on the overall cost of their loan.

Alternatives to the Conventional 97 Loan

Conventional 97 loans are one of the most popular mortgage products available. It offers eligible borrowers the chance to put only 3% down and get fixed-rate financing with no Private Mortgage Insurance. However, it is not the only option. There are a variety of other programs available, each of which offers its own set of benefits.

Home Ready

There is a 3% down payment requirement for this Fannie Mae loan designed for low income borrowers with poor credit. Reduced mortgage insurance costs are also included. Certain income requirements. 

Home Possible

Best for those with a good credit score. Home Possible requires a 3% down payment and allows for non-occupant co-borrowers. Lower mortgage insurance premiums. Certain monthly income requirements.

FHA mortgage

Designed to help multi-unit home borrowers with less-than-stellar credit histories and lower incomes get approved for mortgages. Down payments on FHA mortgages can be as low as 3.5%. There are also no maximum income requirements.

USDA mortgage

A unique loan program that is designed to help those in rural and low-income areas purchase a home. The program is offered through the United States Department of Agriculture and provides eligible borrowers with 100% financing on their loans.

VA mortgage

Designed specifically for veterans and active duty military personnel. It is guaranteed by the U.S. Department of Veterans Affairs and enables qualified borrowers to purchase a home with no down payment and 580 credit score.


HomePath is an innovative Fannie Mae program designed to help buyers of foreclosed and repossessed homes. The program provides buyers with a variety of financing options, including Fannie Mae HomeReady and HomeStyle loans.


The Conventional 97 loan program is a government-backed mortgage program administered by Fannie Mae and Freddie Mac. It is designed to help low- to moderate-income borrowers qualify for a 3% down payment from government-sponsored enterprises (GSEs).

Applicants must be first-time homebuyers with a credit score of 620, and their total debt-to-income ratio must be between 45% and 50%. The type of property you’re buying also plays a role in determining what type of loan you apply for.


What is the minimum credit score for Conventional 97?

The minimum credit score for Conventional 97 funding is 620. This is slightly higher than other types, such as FHA funding, which only require a minimum credit score of 580.

Are Conventional 97 loans easier to close?

While Conventional 97 funding does have fewer restrictions than other types, they still require borrowers to meet certain eligibility standards. This includes a credit score of at least 620, a debt-to-income ratio of 45% or below, and a minimum down payment of 3%.

What is the highest loan amount for a Conventional 97 loan?

The highest credit amount for Conventional 97 funding varies depending on the location of the home. Generally speaking, the highest amount for a Conventional 97 is $679,650 in high-cost areas.

Is it better to have a Conventional 97 loan or FHA?

A conventional 97 mortgage is best for borrowers with low incomes and good to very good credit scores. An FHA mortgage will be better for those with less-than-stellar credit scores.

Is Conventional 97 harder than FHA?

When comparing credit scores, Conventional 97 loans will be harder to qualify for as they require 620 compared to FHA 580.

Do Conventional 97 loans close faster?

Conventional 97 loans have fewer upfront costs and require less paperwork. There are fewer requirements for the borrower, so the closing process can be faster. Conventional 97 loans also have stricter credit score requirements, so if you meet them, you may be able to close faster.