In the golden days of the real estate boom, 97% Conventional Mortgage Financing was readily available for home buyers and the programs weren’t so hard to find. Many mortgage lenders were even offering 100% financing which worked well for a while. Then the mortgage industry experienced bad declines the new rigid mortgage regulations changed everything and all but eliminated low down payment home financing options.
97% Conventional Mortgage Financing starting popping back up in recent years by Fannie Mae, through My Community Mortgage product and for a standard non-MCM Conventional Loan Product. Meant to help first time homebuyers who may not have the resources for a larger down payment, the program allows them to receive loans requiring little to no down payment. It is also great for homeowners whose homes have lost value since purchase but who are otherwise ineligible for the Home Affordable Refinance Program (HARP).
This program makes mortgages more accessible and affordable. Fannie Mae offers guidelines and tools that enhance the benefits of 97% Conventional Mortgage Financing. The flexibility of the program is what distinguishes it from other conventional mortgages in the market.
97% Conventional’ LTV Highlights
- The program provides Maximum loan to value (LTV), Combined Loan to Value (CLTV), and High or Home Equity Combined Loan to Value (HCLTV) is 97%.
- Manufactured homes are not eligible for 97% LTV loans.
- Cash gifts may be used for down payments and reserves.
- It limits the upfront monthly costs of mortgages.
- It supports the long term success of buyers.
- Private Mortgage Insurance (PMI) cancels when the loan reaches 80% LTV.
97% Conventional LTV Home Buying Requirements
- Only 30-year fixed rate mortgages are allowed.
- Only available for low to moderate income families.
- The program requires a minimum of 3% down payment.
- May require homebuyer education prior to loan closings.
- Borrowers are required to pay Private Mortgage Insurance (PMI).
- At least one of the borrowers on the loan must be a first time home buyer.
- The loan must be used for a 1 unit primary residence (including Condos and PUDs).
- The borrower must score more than 620 on the Loan Level Price Adjustment (LLPA) chart.
Other than these features, 97% conventional mortgage financing is quite similar to other conventional mortgage types. But because 97 %conventional mortgage insurance goes away at 80% LTV, it can become a better value over time, especially if you have high credit scores. The higher your credit scores, the cheaper 97% conventional mortgage funding will be. You can check your eligibility for the 97% conventional program and buy your dream home with a down payment of just 3%.
Buyers can learn more about other 2019 First Time Buyer programs here.
Homebuyers that have questions or want to get pre-approved can submit the Request Contact form on this page. Please also be sure to call ph: 800-871-2636 and visit www.FiveStarsMortgage.com for the latest mortgage info.
97% Conventional Program – 3% Down Payment