Last week I told you all about the VA Loans. This week I am going to tell you about a loan program that is for the rest of us. It’s called the Conventional 97 program. Don’t feel bad if you never heard about it. It’s relatively new product offered by Fannie Mae but it is not an FHA program.
Conventional 97 is called that because it is a conventional loan that loans 97% LTV! Imagine that...a conventional loan with only 3% down!
Better yet, it’s not just for first time home buyers. Repeat buyers can also take advantage of this. It does have to be on a primary residence, though, and the loan size can not exceed $424,100.
The Conventional 97's aggressive terms have helped it to grab marketshare from the FHA loan program. Borrowers with better-than-average credit scores, typically save by using the Conventional 97.
The FHA program does still have it’s place in the mortgage world, though. FHA loans require down payments of 3.5% but home buyers with less-than-perfect credit may find FHA loans to be more cost-effective than the Conventional 97. Especially because FHA mortgage rates are typically 25 basis points (0.25%) below rates for a comparable conventional loan based on credit scores.
So, which loan program is best? Well, there is no "best" low-down payment mortgage program. What's best for one home buyer may not be what's best for another. Each program has its benefits. So call a mortgage provider that can help you find what best for you and then call me to find you the home that is best for you!