{"id":868,"date":"2014-12-09T18:41:05","date_gmt":"2014-12-09T18:41:05","guid":{"rendered":"http:\/\/riverbankfinance.com\/blog\/?p=868"},"modified":"2016-01-10T03:14:39","modified_gmt":"2016-01-10T03:14:39","slug":"updates-for-fannie-mae-conventional-97-mortgage-loans","status":"publish","type":"post","link":"https:\/\/riverbankfinance.com\/blog\/updates-for-fannie-mae-conventional-97-mortgage-loans\/","title":{"rendered":"Updates for Fannie Mae Conventional 97% Mortgage Loans"},"content":{"rendered":"

\"Fannie<\/a><\/p>\n

FANNIE MAE CONVENTIONAL 97% MORTGAGE LOANS<\/h1>\n

A Conventional 97% mortgage loan<\/strong>\u00a0is a Fannie Mae home loan that allows homeowners to purchase a home with only a 3% down payment. It is a great misconception that all conventional mortgage\u00a0loans<\/a> require a 20% down payment however many options for alternative financing do exist with low down payments or even no down payments.<\/p>\n

The Conventional 97% Mortgage\u00a0is Back!<\/h1>\n

The 3% down Conventional mortgage is now back through Fannie Mae’s\u00a0My Community Mortgage\u00ae\u00a0<\/sup>as well as for standard conventional loans. This program is designed for first time homebuyers that may not have the resources for a large down payment. At least one of the borrowers on the loan must be a first time home buyer in a purchase transaction.\u00a0The \u00a0My Community Mortgage\u00ae\u00a0<\/sup>program is only\u00a0available for low to moderate income families and may require home buyer education prior to loan closings. The standard conventional mortgage is also designed for first time home buyers but does not have income restrictions.<\/p>\n

Related: Fannie Mae HomeReady 97% financing<\/a><\/p>\n

97% refinance loans will also be made available for those who do not qualify for a HARP refinance but have loans owned by Fannie Mae (see Fannie Mae Loan Lookup tool<\/a> to confirm eligibility). This high LTV refinance program will be available only as a\u00a0limited cash-out option which allows a borrower to simply change their interest rate or mortgage term.<\/p>\n

Update on the Conventional 97% Mortgage from Fannie Mae Announcement<\/h2>\n

Announced on December 8th, 2014 Fannie Mae will reinstate the 3% down mortgage program. Fannie Mae’ Executive Vice President Andrew Bon Salle explains,\u00a0 \u201cThis option alone will not solve all the challenges around access to credit.\u00a0 Our new 97 percent LTV offering is simply one way we are working to remove barriers for creditworthy borrowers to get a mortgage.\u00a0 We are confident that these loans can be good business for lenders, safe and sound for Fannie Mae and an affordable, responsible option for qualified borrowers.\u201d<\/p>\n

Read:\u00a0Fannie Mae’s Announcement on 97 Percent LTV Option for First-Time Homebuyers<\/a><\/p>\n

Alternatives to Conventional 97% Mortgage Financing<\/h1>\n

If a borrower does not meet the eligibility requirements for a\u00a0Conventional 97% Mortgage, homebuyers may need\u00a0alternatives for low down payment home loans. One great options is the FHA mortgage<\/a>\u00a0program which still only requires a 3.5% down payment.<\/p>\n

FHA Mortgages have been very popular over the past several years as they are more flexible on credit and qualifying after bankruptcies and foreclosures. FHA loans also may allow for family members or close friends to gift the down payment.<\/p>\n

That’s right, a borrower can buy a home with none of their own money out of pocket which may\u00a0be limited\u00a0on 97% Conventional financing. Closing costs may also be paid by the seller with a limit of 6% of the home’s purchase price while Conventional loans limit seller paid closing costs (Seller concessions) at 3%.<\/p>\n

Conventional 97 Mortgage Alternatives: USDA Rural Development Loan<\/h2>\n

Another low down payment mortgage alternative may be the USDA Rural Development Loan<\/a> which is a no down payment mortgage<\/a>\u00a0with 100% financing. While the USDA option may be great to consider, there are downsides. \u00a0Currently many USDA field offices are caught up on loan application and are approving Rural Development loans very quickly however at times they do get several weeks behind before reviewing applications.<\/p>\n

One major factor of this loan option is that the home must be in a rural area. The USDA guarantee this home loan type to help grow rural communities therefore the location of the home cannot be in a largely urban area (see the USDA’s eligibility website for more information).<\/p>\n

USDA Rural Development Loan Benefits:<\/strong><\/p>\n