4 Types of Conventional 97 Home Loans for First Time Home Buyers

A very good Tuesday morning to you and welcome to Houston first time home buyers edition. While the sky is currently gray and looks like it's going to start crying any minute now, I know you're feeling very sunny. Let's get started on today's topic. Conventional 97 is a conventional program offered by Fannie Mae and Freddie Mac that allow first time home buyers with credit scores of 620 and higher to purchase their primary home with only 3% down payment and no upfront mortgage insurance premium. In addition, although private mortgage insurance will be required, it will not be a permanent fixture for the life of the loan. You will be able to remove it or it will fall off once certain condition is met. There are four types of loans under conventional 97. They include:

Fannie Mae 97

• Requires a credit score of at least 620 or higher.

• Debt-to-income ratio of 43% or below.

• Offers a 3% down payment for first-time home buyers.

• Do not have any income limits.

• If you do not have the needed funds to cover your 3% down payment, you can speak with your loan officer about down payment assistance programs.

• Private mortgage insurance is required.

• First time home buyer must complete a home buyer education course.

Fannie Mae HomeReady

• Also require only 3% down payment.

• Debt-to-income ratio of 43% or below is required.

• Does have income limits.

• First time home buyers can use their roommate income to help them qualify.

• Minimum credit score requirement of 620.

• Private mortgage insurance is required.

• First time home buyers must complete a home buyer education course.

• Private mortgage insurance can removed when the loan to value reaches 80% or less.

Freddie Mac HomeOne

• No income limits.

• Credit score of 620 or higher is required.

• Debt-to-income ratio of 43% or below.

• 3% down payment for borrowers purchasing a single-family primary home.

• Private mortgage insurance is required.

• Must complete a home buyer education course.

• Private mortgage insurance can be removed when the loan to value reaches 80% or less.

Freddie Mac Home Possible

• Is similar to the Fannie Mae HomeReady program

• Credit score of 620 or higher is required.

• Debt-to-income ratio of 43% or below.

• Is for low-income first time home buyers whose income is 80% or less of the area median income.

• Only 3% down payment.

• Does have income limit.

• Private mortgage insurance is required.

• Private mortgage insurance can be removed when the loan to value reaches 80% or less.

• Down payment funds can come from a variety of sources that includes family and housing programs.

• Home buyer education course must be completed.

As a first time home buyer, if you choose to go with one of the above mention mortgage program, make sure to speak with a trusted loan officer that will advise you based on your needs and not theirs. It is a big decision. Choose wisely:) As always, thank you so much for stopping by. Remember, if you or someone you know is thinking of purchasing a first home, please give us a call or Email us. We are here to help. We have been helping Houston first time home buyers since 2011 and we can help you. I hope you have an amazing day. Until next time...Diana