Standard 97 vs HomeReady vs Home Possible
Three public 3%-down paths, and they are not interchangeable.
Fannie Mae publishes two purchase paths at 97% LTV, and Freddie Mac publishes a third. Which one fits depends on whether you have owned a home recently and how your income compares with the area median — not on a single "conventional 3% down" rule.
Fannie Mae Standard 97% LTV
For a one-unit primary residence, fixed-rate purchase, Fannie Mae’s Standard 97% LTV option requires at least one borrower to be a first-time homebuyer under DU review, with a maximum 30-year term and no published income limit (Fannie Mae Selling Guide B2-1.3-01, retrieved Sep. 28, 2026).
Fannie Mae HomeReady
HomeReady is a conventional community-lending mortgage for a 1–4 unit primary residence, purchase or limited cash-out refinance, reviewed through DU only. At the 95.01–97% LTV band it is fixed-rate, purchase-or-limited-cash-out, one-unit-only, and total annual qualifying income may not exceed 80% of the area median income for the property’s location (Fannie Mae Selling Guide B5-6-01, retrieved Sep. 28, 2026). Homeownership education is required on HomeReady purchases when all occupying borrowers are first-time homebuyers.
Freddie Mac Home Possible
Home Possible is Freddie Mac’s low-down-payment mortgage for low- and very-low-income borrowers: down payment as low as 3% with flexible funding sources, qualifying income limited to 80% of the area median income, and a maximum 97% LTV (105% with an Affordable Seconds® subordinate lien) on eligible 1-unit properties (Freddie Mac, retrieved Sep. 28, 2026). Homeownership education is required when all borrowers are first-time homebuyers.
PMI, and when it goes away
A conventional loan with less than 20% down generally requires private mortgage insurance (PMI), which protects the lender, not the borrower (CFPB, last reviewed Aug. 28, 2023). On many single-family principal-residence mortgages closed on or after July 29, 1999, a borrower may request PMI cancellation once the principal balance is scheduled to reach 80% of the original value, and the servicer must generally terminate PMI automatically at 78% if the loan is current (CFPB, last reviewed Aug. 28, 2026). FHA and VA loans follow different rules.
Loan amount versus the 2026 conforming limit
FHFA’s 2026 baseline conforming loan limit for a one-unit property in most of the United States is $832,750, with a high-cost ceiling of $1,249,125 (FHFA, dated Nov. 25, 2025). A loan above the applicable county limit is jumbo, not conforming, and is outside the 3%-down conventional path described here.
