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The Fannie Mae Flexible 97TM Mortgage

Mortgage Library: Types of Mortgage Loans: Fannie Mae Flexible 97 Mortgage

About Flexible 97 Mortgage

Flexible 97, a new, innovative mortgage product is the low down payment loan for home buyers with very good credit, but limited savings.  Flexible 97 only requires a 3 percent down payment, which can be funded by gifts, grants, unsecured loan from family, employer, nonprofit, or government agency, or loans secured by marketable assets such as CDs, and 401(k) accounts.  Not only does Flexible 97 work for first-time home buyers, but also for those who want to buy more house, but have insufficient equity in their current property to fund a conventional loan’s down payment.  

Flexible 97 mortgages are fixed-rate, fully amortizing loans with 10-, 15-, 20-, 25-, or 30-year terms. Eligible properties include single family principal residences,  condos and PUDs. Maximum loan amount may not exceed the Fannie Mae's conforming loan limit.

Flexible 97 vs. Other Low Down Payment Mortgage Programs

Flexible 97 features lowest amount of borrower's own funds to close, lowest qualifying income, and most flexible source of down payment funds with none of the income restrictions or counseling required of other loans.

The annual mortgage insurance premium is about half the standard MI premium. The 1.5 percent upfront fee (which can be financed by adding about 3/8 percent to rate) saves the average borrower $8.00 per month per $100,000 loan (pre-tax). In addition, the tax deductibility of mortgage interest can double this saving.

For borrowers with very good credit histories, Flexible 97 is an excellent option when compared to FHA mortgage products.  With Flexible 97, consumers need less cash to close, particularly on loans in high-cost areas where the house price is $125,000 or greater, or in areas with lower closing costs. Tthe upfront costs are lower for Flexible 97 -- just 1.5% for Flexible 97 vs. 2.0% for FHA.  Additionally, homeowners build equity significantly faster with Flexible 97 than with FHA. 

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