3 Percent Down Conventional Mortgage 2026: HomeReady, Home Possible, and Standard Eligibility

Three percent down on a conventional loan is available but not for every borrower. HomeReady (Fannie Mae) and Home Possible (Freddie Mac) both offer 97% LTV, but eligibility has income and geographic conditions that must be understood before positioning this option.

HomeReady (Fannie Mae)

• ✦Income limit: 80% of Area Median Income (AMI) for the census tract. Exceptions for high-cost areas and properties in low-income census tracts.
• ✦FICO: 620 minimum.
• ✦MI: Reduced private mortgage insurance coverage requirements versus standard conventional, which reduces monthly MI cost.
• ✦Boarder income: May be counted under specific documentation.
• ✦Education: Homeownership education course required for first-time homebuyers.

Home Possible (Freddie Mac)

• ✦Income limit: 80% of AMI for the property location, similar to HomeReady.
• ✦FICO: 660 minimum for fixed-rate purchases.
• ✦MI: Similar reduced MI relative to standard conventional.
• ✦Sweat equity: Allowed as part of the down payment in some circumstances.

3% Down vs. FHA: The Math

At 3% down with a 680 FICO, conventional PMI is typically lower than FHA MIP for creditworthy borrowers. FHA MIP runs for the life of the loan on most configurations; conventional PMI cancels at 78% LTV. At 620 FICO, FHA becomes more competitive. The crossover point depends on FICO, rate environment, and loan amount.