Loan Program
Conventional 97, three percent down without going FHA.
The low-down-payment conventional option, with mortgage insurance that ends.
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Loan Selection
Conventional 97
The low-down-payment conventional option, with mortgage insurance that ends.
3% Down, Conventional Terms
97% loan-to-value on a standard conventional loan, so you're not trading a low down payment for permanent mortgage insurance.
PMI That Actually Ends
Private mortgage insurance cancels automatically at 78% of original value, with no refinance required to be rid of it.
First-Time Buyer Defined Generously
Not having owned a principal residence in the last three years counts, so previous owners who have been renting are frequently eligible again.
Conventional 97 Full Description
Everything you need to know before you apply.
Conventional 97 is standard conventional financing at 97% loan-to-value, meaning three percent down. It exists because the gap between a 3.5% FHA down payment and a 5% conventional one was never really about the money - it was about mortgage insurance, and which kind you get stuck with. Fannie Mae and Freddie Mac both run versions of it, and at least one borrower generally needs to be a first-time buyer, which the agencies define generously: anyone who hasn't owned a principal residence in the past three years qualifies, so a previous owner who has been renting for a while is usually eligible again.
Not sure if a Conventional 97 loan fits your situation?
Why It Often Beats FHA
The reason to look at it before FHA is what happens after closing. Private mortgage insurance on a conventional loan cancels automatically once the balance reaches 78% of the original value, and can be requested at 80%. FHA's annual premium, at less than ten percent down, stays for the life of the loan and only comes off by refinancing. Over the years most people actually keep a house, that difference usually outweighs FHA's slightly friendlier rate at the outset. It doesn't always - a lower credit score can price conventional badly enough to flip the answer - which is exactly the comparison worth running properly before you commit to either.
If you would like to explore whether a Conventional 97 loan matches your purchase price, credit profile and long-term budget, reach out to 3E Lending to speak with our licensed Texas mortgage team in Katy.
Conventional 97 - Quick Reference
Straight answers to what borrowers ask most, each one showing the guideline or investor practice it comes from — so you can see where the answer came from, not just take our word for it.
Credit Score
No numeric minimum: 97% LTVLoan-to-Value ratio — the loan amount divided by the home's appraised value. must go through DU, which no longer sets a floor. Overlays commonly land at 620-640, and pricing improves at 700 and again at 740.
Source: Fannie Mae Selling Guide B3-5.1-01; B2-1.3-01 (97% LTV requires DU) · varies by lender
Credit History / Strength
Clean recent history expected. Standard conventional seasoning after derogatories.
Source: Fannie Mae Selling Guide B3-5.3-07
Interest Rates
Conventional pricing with LLPALoan-Level Price Adjustment — a fee that shifts your rate based on credit score, down payment, and loan type. add-ons, which are heavier at high LTVLoan-to-Value ratio — the loan amount divided by the home's appraised value..
Source: Fannie Mae LLPA matrix, eff. 2026-01-28 · varies by lender
Income / Employment Verification
Most recent paystub and W-2 or written VOE, plus a verbal check within 10 business days of the note. Two years of returns applies to variable or self-employed income.
Source: Fannie Mae Selling Guide B3-3.2-01, B3-3.3-01, B3-3.1-04
Self Employment Qualifications
2 years of business and personal returns. Fannie Mae allows 1 year where the business has run 5 years and the borrower has held 25%+ ownership throughout.
Source: Fannie Mae Selling Guide B3-3.5-01 · varies by lender
Documentation Difficulty
Standard full documentation, identical to any other conventional file.
Source: Fannie Mae / Freddie Mac guidelines
Debt to Income (DTI)
45% typical, to 50% with strong compensating factors through automated underwriting.
Source: Fannie Mae DU / Freddie Mac LPA · varies by lender
Down Payment Requirement
3% minimum. At least one borrower generally must be a first-time buyer.
Source: Fannie Mae B2-1.3-01 (97% LTV, first-time buyer) and B5-6-01 (HomeReady, no such rule); Freddie Mac 4605.1 · varies by lender
Down Payment Collateral Alternatives
Gifts, grants and down payment assistance are all permitted sources.
Source: Fannie Mae B3-4.3-04 (gifts), B3-4.3-06 (grants and lender contributions)
Out of Pocket Fees
Closing costs of roughly 2-5% plus the down payment. PMI is monthly, not upfront.
Source: Typical market range - the Loan Estimate discloses actual costs · varies by lender
Process Speed / Timeframe
30-45 days, the same as any conventional purchase.
Source: Industry standard, 2026 · varies by lender
Figures on this page reviewed by Kimberli Pham, Mortgage Broker · NMLS ID 2459395, on . Program terms are set by the lender a file is placed with and change over time — each figure cites its source above.
The figures above are program guidelines and illustrative examples, not a quote. Actual terms vary by circumstances - your credit profile, income, the property, occupancy, loan amount, and the lender the file is placed with. Individual lenders also apply their own overlays on top of agency minimums. Nothing on this page is a commitment to lend. Approval depends on completion of underwriting, and not every applicant qualifies.
What Our Clients Say
Real reviews from 3E Lending borrowers, verified on Google.
“This was by far the smoothest, most straightforward, and best-informed lending experience I have had. Kimberli's knowledge, professionalism, and commitment to customer service were evident at every stage.”
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