Everything You Need to Know About 97 Loans

Have you been looking for a way to buy a home but can't afford a large down payment? The good news is that you may be eligible for a 97 loan. In this article, we'll explore what a 97 loan is, how it works, and how to qualify.

What is a 97 Loan?

A 97 loan, also known as a Conventional 97 Loan, is a type of mortgage offered by Fannie Mae. It requires a minimum down payment of just 3%, making it an attractive option for first-time homebuyers or those who don't have a large amount of savings. It's important to note that this loan is only available for primary residences, meaning it cannot be used to purchase an investment property or vacation home.

How Does a 97 Loan Work?

A 97 loan works in the same way as a traditional mortgage. You'll apply for the loan through a lender, who will evaluate your credit score, income, and debt-to-income ratio to determine your eligibility. If approved, you'll pay a 3% down payment and the lender will finance the remaining 97% of the home's value.

One benefit of a 97 loan is that it doesn't require mortgage insurance if you have a credit score of 680 or higher. If your credit score is below 680, you'll be required to pay private mortgage insurance until you reach 20% equity in the home.

How to Qualify for a 97 Loan

In order to qualify for a 97 loan, you'll need to meet certain criteria. Here are the requirements:

• You must have a credit score of at least 620.
• You must be able to prove that you have stable employment and income.
• Your debt-to-income ratio (DTI) cannot exceed 43%. This means that your monthly debt payments (credit card bills, car loans, student loans, etc.) cannot be more than 43% of your monthly income.
• You must be purchasing a primary residence – this loan cannot be used for investment properties or second homes.
• You must complete a homebuyer education course.

If you meet these requirements, you may be eligible for a 97 loan. Keep in mind that each lender may have their own additional requirements, so it's important to shop around and compare offers.

Benefits of a 97 Loan

There are several benefits to choosing a 97 loan, including:

• A smaller down payment requirement, which means you can purchase a home sooner than if you had to save for a larger down payment.
• No upfront mortgage insurance premium (if your credit score is 680 or higher).
• No minimum borrower contribution, which means you can receive a gift from family or friends to cover the down payment and closing costs.
• You'll have more money available for other expenses, like home repairs or renovations.

Conclusion

If you're a first-time homebuyer or don't have a large down payment saved, a 97 loan may be a great option for you. It allows you to purchase a home with just a 3% down payment, and if you have a credit score of 680 or higher, you won't have to pay mortgage insurance. Remember to shop around for lenders and compare offers to find the best loan for your needs.

At [Your Company Name], we specialize in helping borrowers find the perfect loan for their needs. Contact us today to learn more about how we can help you achieve your homeownership goals.

Get A Loan Now Quickly And Easily