Conventional home loans with 3% down payment are now available for approved home buyers nationwide in 2025. 97% Conforming loans are a great tool to help first-time buyers who may not have the resources for a larger down payment loan. The program allows them to receive loans requiring little to no down payment.
Keep in mind there are a few government-backed home loans that still offer 100% financing for eligible home buyers. However, they come with stipulations regarding approval. VA loans require the borrower to be military or a Veteran with proper entitlement. With USDA loans, the property must be located in a rural deemed location and there are also income limits.
The 97 Conventional loan program provides a good solution to borrowers that do not meet VA or USDA requirements. Fannie Mae offers guidelines and tools that enhance the benefits of 97% conventional mortgage, the flexibility built into the program are what distinguish it from other programs in the market.
97% Conventional Mortgage Highlights
- The program provides a maximum loan to value (LTV), Combined Loan to Value (CLTV), and High or Home Equity Combined Loan to Value (HCLTV) is 97%.
- Cash gifts from family or eligible sources may be used for down payments and reserves.
- The program caps the upfront monthly costs of mortgages.
- The program supports the long term success of buyers.
- Private Mortgage Insurance (PMI) cancels when the loan reaches 80% LTV.
- Manufactured homes are not eligible for 97% LTV loans.
97% Conventional Loan 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 home buyer 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).
- 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 the mortgage insurance goes away at 80% LTV, it can become a better value over time, especially if you are a borrower with high credit scores. The higher your credit scores, the cheaper mortgage costs. You can check your eligibility today by contacting us 7 days a week. Just call or submit the Info Request Form on this page.