Conventional 97 Loan
If you’re a first-time home buyer, saving up enough money for a downpayment can be a struggle. In fact, in recent research by Fannie Mae, it was discovered that the down payment requirement was the most significant hurdle for first-time home buyers. For many, it may seem like your only option for homeownership is a government-backed loan with higher fees than conventional loans, but that doesn’t have to be the case.
With a Conventional 97 loan, the borrower is only required to put down 3%, leaving 97% to be financed – hence the name. Typically, conventional loans require at least 5% down, and that 2% savings can be the difference between getting into a home.
For example, a 5% down payment on a $500,000 is $25,000, 3% is $15,000 – that’s a huge $10,000 savings!
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Documents You Need To Be Approved
- 12 Months Rental History: 12 months canceled checks, for current residence if renting, or 12 months bank transaction history, for direct transfers
- Asset Statements: 401k, IRA, Retirement accounts: Most recent 2 months & all pages even if they are blank
- Bank Statements – Last 2 Months: All bank statements for all accounts from the last 2 months. Include all numbered pages of all bank statements!
- Business Tax Returns – Last 2 Years: Last 2 years of business tax returns to prove income, include all schedules
- Business Tax Returns – Most Recent Year: All pages and schedules
- Checking – Bank Statements: Please include most recent 2 months
- Child Support Order: All pages
- Copy of Lease: Current lease agreement if renting current residence
- Credit Card Processing Form for Appraisal: Form to collect credit card info to pay for the appraisal
- DD Form 214: Certificate of release or discharge from active duty
- Divorce Decree: Provide full divorce decree or separation agreement
- Driver’s License: Legible state-issued driver’s license
- Evidence of Insurance: For all properties owned
- Federal Tax Returns – Last 2 Years: Last 2 years of federal tax returns to prove income, include all schedules
- Final Closing Statements: For all properties bought in last 2 years
- HOA Statement: Most current statement
- Homeowners Insurance Info: Provide the name and contact details for your insurance agent for the subject property
- K-1 Statements: Most recent 2 years of all K-1s listed on tax returns
- Lease Agreement(s): For all properties owned that are currently rented
- Loan Application (1003): Please complete all fields
- Mortgage Statement(s): Most recent for all properties owned
- Pay Stubs – Received in Last 30 Days: Last 30 days of pay stubs to prove income
- Pension Statement: Most recent statement
- Private Money Loan App: Complete all fields
- Saving – Bank Statements: Please include the most recent 2 months
- Social Security Awards Letter: Obtained from the Social Security Administration
- Social Security Card: Legible social security card to prove social security number
- VA Certificate of Eligibility: All pages
- W-2s – Last 2 Years: Last 2 years of W-2s to prove income
- YTD Profit & Loss and Balance Sheet: For any business with 25% or more ownership
What Else Should I Know About The Conventional 97 Loan
The Conventional 97 loan is a great way for first-time home buyers to get into a house sooner rather than later. It is important to note that manufactured homes are not allowed with this type of financing; only single-family homes, townhomes, and condominiums are.
Since you will not be putting down 20%, you will be required to pay Primary Mortgage Insurance (PMI). This monthly payment will add $75 to $125 per $100,000 borrowed per month based on your credit score.
Contact us to see if a Conventional 97 loan would be the right fit for you.