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Conventional 97 Loan

For a lot of buyers, the down payment is the thing standing between renting and owning. A Conventional 97 Loan is designed to shrink that hurdle — letting qualified buyers purchase a home with as little as 3% down, without giving up the advantages of conventional financing.

What Is a Conventional 97 Loan?

A Conventional 97 Loan is a conventional mortgage program that allows qualified borrowers to purchase a home with as little as 3% down. Designed to make homeownership more accessible, this loan offers many of the benefits of conventional financing while reducing the upfront cash needed to buy a home.

Because it's a conventional loan, eligible borrowers may also benefit from competitive interest rate options and the ability to cancel private mortgage insurance (PMI) once certain equity requirements are met.

In other words, you're not trading down to get a lower down payment. You're getting into a home sooner while staying on a conventional path — one where the mortgage insurance doesn't necessarily follow you for the life of the loan.

Apply for a CONVENTIONAL 97 Loan

Who a Conventional 97 Loan May Be Right For

A Conventional 97 Loan may be a good fit for buyers looking for a low down payment option while taking advantage of conventional financing.

This loan may be worth exploring if you:

  • Want to purchase a home with as little as 3% down
  • Are a first-time homebuyer or have not owned a home in the past three years
  • Have limited savings for a down payment
  • Prefer a conventional loan over a government-backed mortgage
  • Have access to eligible gift funds that can be used toward your down payment
  • Are purchasing a primary residence

General Qualification Guidelines

Every buyer's situation is different. Your credit profile, savings, homeownership history, and the property itself all help determine whether this program is a fit.

An ALCOVA loan officer can review your financial profile and walk through whether a Conventional 97 Loan lines up with your homeownership goals.

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Benefits and Considerations of a Conventional 97 Loan

Like any mortgage option, a Conventional 97 Loan comes with both advantages and requirements. The goal is understanding how they fit your budget and your plans for the home.
  • First-time homebuyer requirements apply (or no homeownership within the previous three years)
  • Primary residence occupancy is required
  • Mortgage insurance is required with less than a 20% down payment
  • Qualification requirements must be met
  • Property eligibility guidelines apply
  • Monthly mortgage insurance is typically required
  • Upfront mortgage insurance premium (UFMIP) applies
  • Loan limits vary by area
  • Property must meet FHA appraisal and condition requirements
  • Primary residence only (not intended for most investment properties)

When An Conventional 97 Loan Makes Sense

At ALCOVA, our goal is to help you understand whether a Conventional 97 Loan fits your financial picture and long-term homeownership goals.

A Conventional 97 Loan may be worth considering when:

  • You want to purchase a home with a low down payment
  • You're buying your first home or haven't owned one in several years
  • You'd like to use eligible gift funds for your down payment
  • You want the benefits of conventional financing
  • You're looking for an affordable path to homeownership with minimal upfront costs
  • You plan to occupy the home as your primary residence
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A Little Clarity Goes a Long Way

Our loan calculator can help you estimate monthly payments and better understand your homebuying options before taking the next step.
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Conventional 97 vs. HomeReady® vs. FHA Loans

Low down payment programs can look similar on the surface. The differences usually come down to income limits, who's eligible, and what happens with mortgage insurance over time.
Feature Conventional 97 Loan HomeReady® Mortgage FHA Loan
Primary Purpose Low down payment conventional financing Affordable conventional financing for eligible borrowers Government-backed financing with flexible qualification guidelines
Down Payment As low as 3% As low as 3% Typically 3.5%
Income Limits No Yes No
First-Time Buyer Requirement Yes (or no ownership in the past three years) No No
Gift Funds Eligible for entire down payment Eligible Eligible
Common Uses First-time homebuyers seeking conventional financing Eligible low- to moderate-income borrowers Lower down payment home purchases

A Smaller Down Payment Doesn't Have to Mean Waiting

If saving 20% has felt out of reach, it's worth knowing what 3% actually opens up. Sometimes buyers are closer to ready than they realize. An ALCOVA loan officer can help you review your savings, confirm your eligibility, and walk through what a Conventional 97 Loan could look like for your situation.
APPLY FOR A CONVENTIONAL 97 LOAN

Frequently Asked Questions About Conventional 97 Loans

Generally, this program is available to qualified first-time homebuyers or buyers who have not owned a home within the previous three years.

Qualified borrowers may be able to purchase a home with as little as 3% down.

Yes. Eligible gift funds may be used to cover the entire required down payment, subject to program guidelines.

No. Unlike some low down payment programs, the Conventional 97 Loan does not have income restrictions.

Private mortgage insurance (PMI) is generally required when your down payment is less than 20%. Depending on your loan and equity position, PMI may be removed once eligibility requirements are met.
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