A down payment is the portion of the home’s purchase price that you pay upfront, and the mortgage covers the remainder. With a 5% down payment, you are paying only 5% of the home’s purchase price upfront, and the lender finances the rest. For example, if you were buying a home for $1.5 million, your down payment would be $75,000, and you would borrow $1.425 million from your lender.

Who Qualifies for a 5% Down Payment Mortgage?

First-Time Homebuyers: Many first-time homebuyers qualify for a 5% down payment mortgage, which makes purchasing a home more accessible.

Buyers with Strong Credit: Lenders will often require a good credit score (usually at least 620) for a 5% down payment mortgage. The better your credit score, the more favorable your terms might be.

Income and Employment Stability: Lenders will evaluate your income and employment history to ensure that you can afford the mortgage payments.

Private Mortgage Insurance (PMI): Since you’re putting down less than 20%, lenders will require you to pay for Private Mortgage Insurance (PMI). This is an additional cost added to your monthly mortgage payment, which protects the lender in case you default on the loan.