The 3% Down Conventional Loan

You’ve likely HEARD OF the 3.5% down FHA loan but did you know that there EXISTS a 3% Down OPTION for Conventional loans?  and that THIS COULD BE your saving grace in a competitive market such as the 2021 Housing Market?

In this post, I will be breaking down what YOU need to know about the simple requirements for this 3% Down Conventional Loan and why This Loan may be the best option for you when Buying a House in 2021!

The 3% Down Conventional Loan No One Is Talking About

Minimum Requirements For The 3% Down Conventional Loan

1. YOUR Minimum credit score MUST BE a 620 which I think is quite a bit higher than some of the other low down payment loans out there!
2. YOU MUST be able to show RELIABLE income and employment. This is pretty much on par with other low down payment loan types out there.
3. YOUR Debt to income ratio MUST BE below 43%.
4. The Conventional 97 requires that you live in this house as your PRIMARY RESIDENCE. You can’t use this loan to buy a Rental House.

When To Consider The 3% Down Conventional Loan

If you were drawn to the FHA loan in this market due to its LOW DOWN PAYMENT REQUIREMENT and you know your credit score is above a 620, I encourage you to talk to your lender about the Conventional 97 Loan. See If it may be a better Financing DEAL For your home purchase!

Not too long ago, I got to experience a remarkably interesting situation where the Conventional 97 Loan saved a contract for one of my clients! We made an offer on a HOME and ended up in a MULTIPLE OFFER SITUATION with TWELVE OTHER OFFERS.

Due to the strength of the offer, ours was chosen and my clients were planning on using a conventional loan with 10% down payment. Well…It turned out that the house did not appraise for the contract price and the seller was not willing to reduce the price to the appraised value.

This left my clients needing to cover the difference in the appraisal if they wanted to continue with the purchase.

After explaining all their available options and potential risks, they decided to keep moving forward on the purchase. Since they had already allocated their cash on hand for a 10% down payment and covering their own closing costs, I brought up the possibility of the Conventional 97.

This freed up enough of my client’s cash so that they could now cover the 3% down payment, THEIR OWN closing costs as well as what was needed to cover the difference between the appraisal and contract price.

We were able to do this while still getting them a monthly payment that they were happy with!