Conventional loans · Fannie Mae B2-1.3-013% down on a conventional loan: Fannie Mae's 95.01–97% LTV rules

Fannie Mae allows a purchase loan above 95% and up to 97% loan-to-value – 3% down – under specific conditions. At least one borrower must be a first-time homebuyer, which for this purpose means answering 'No' on the loan application to having had an ownership interest in a property in the last three years. The loan must be fixed-rate with a term of up to 30 years (no high-balance or adjustable-rate loans), on a one-unit principal residence, and every borrower must live there unless a Community Seconds subordinate loan is part of the deal (which can take the combined LTV up to 105%). Manufactured homes qualify only if they meet MH Advantage. It must be underwritten in Desktop Underwriter, which sets the reserves, and homeownership education requirements apply. HomeReady loans follow their own 97% rules. Separately, Fannie Mae's purchase rules limit cash back to the buyer at closing to a refund of overpaid fees or a legitimate prorated tax credit where taxes are paid in arrears, and allow non-arm's-length purchases of existing homes; on new construction, a buyer related to or working for the builder or seller can finance only a principal residence. When buying a short sale, the buyer may pay fees normally owed by the seller – a short sale processing fee, a payment to a second lienholder, delinquent taxes or HOA dues – if both the buyer and the seller's servicer get the details in writing.