Loan Servicing Email Us QuickClose Login Rate Quote
Get A Rate Quote
Menu

You are about to leave the Capital Bank Website

DISCLAIMER: When you click Accept you will be leaving the Capital Bank (“the Bank”) website and are going to a website that is not operated by the Bank. We are not responsible for the content or availability of linked sites.

ABOUT THIRD PARTY LINKS ON OUR SITE
The Bank offers links to other third party websites that may be of interest to our website visitors. The links provided in our website are provided solely for your convenience and may assist you in locating other useful information on the Internet. When you click on these links you will leave the Bank’s website and will be redirected to another site. These sites are not under control of the Bank. The Bank is not responsible for the content of linked third party websites. We are not an agent for these third parties nor do we endorse or guarantee their products. We make no representation or warranty regarding the accuracy of the information contained in the linked sites. We suggest that you always verify the information obtained from linked website before acting upon this information. Also, please be aware that the security and privacy policies on these sites may be different than the bank’s policies, so please read third party privacy and security policies closely. If you have any questions or concerns about the products and services offered on linked third party websites, please contact the third-party directly.

×

LOAN SERVICING

What is the Conventional 97 Loan Program and How Does it Work?

 

Get a Rate Quote! Start Now

You may have heard about an FHA loan, which has a 3.5% minimum down payment (if not, check out our “What is an FHA Loan?”).

But, have you heard of the Conventional 97 Loan Program with only 3% down?

If you qualify for conventional mortgage pricing only to find yourself strapped for cash, or you want to hold back some cash you would normally allocate for your down payment for something like home improvements or moving costs, the Conventional 97% Loan Program offered by Freddie Mac®️ (or the Fannie 97®️ offered by FANNIE MAE®️) may be able to help.

How Does a Conventional 97 Loan Program Work?

With this mortgage program, you finance 97% of the price of the home and only put 3% down. However, Private Mortgage Insurance (or PMI) will be necessary.  PMI is insurance a borrower pays on their loan to reduce the risk of loss to the lender in case the borrower defaults on their mortgage payment.

With the conventional 97 loan program, PMI doesn’t stay for the entire life of the loan. It typically cancels once you’ve paid a certain amount of the original purchase price.  You may even be eligible to drop the mortgage insurance sooner using the current appraised value.

Who Qualifies for a Conventional 97 Loan Program?

To take advantage of the conventional 97 loan program, the borrower may need to be a first time home buyer, though not in all instances.

If there are two borrowers on the mortgage application at least one of them must qualify as a first-time home buyer and have not owned a home within the last 36 months.

Always speak with an experienced mortgage loan originator so you can discuss the option that is best suited for you – and really challenge them on what is available to meet your needs, whether it is a low down payment, a maximum monthly mortgage amount for your budget, or both.