Can I Buy a House With 5% Down? NC & SC Guide
Yes. Qualified buyers can purchase a primary residence with 5% down using a conventional mortgage, and you don't have to be a first-time buyer. You'll generally pay private mortgage insurance (PMI) until you build enough equity, and you'll need money for closing costs on top of the down payment. Depending on the program, some buyers can put down even less: 3% conventional, 3.5% FHA, or nothing down with VA or USDA.
I'm Paul Mattos, a mortgage broker with Refine Mortgage, licensed in North Carolina and South Carolina. When buyers ask whether they should put 5% down, I help them compare the numbers instead of assuming the smallest or largest down payment is automatically right.
How Buying With 5% Down Works
With 5% down, you finance 95% of the purchase price. The down payment doesn't include closing costs, prepaid expenses or other funds you may need for the transaction.
The lender also reviews:
Credit history and scores
Qualifying income and employment
Existing debts and the new housing payment
Where your down payment funds come from
The property type, how you'll use it and the appraisal
Any savings required after closing
Having the down payment doesn't guarantee approval. My guide to conventional home loans in NC and SC explains how these requirements fit together.
Which Loan Programs Allow a Low Down Payment?
Conventional Loans
5% down: available to first-time and repeat buyers purchasing a primary residence
3% down: some conventional programs allow it, with requirements that may involve first-time buyer status, income limits or homebuyer education
Two- to four-unit homes: Fannie Mae and Freddie Mac also allow 5% down on eligible two- to four-unit properties when you live in one of the units
PMI generally applies with less than 20% down. Second homes, investment properties, jumbo loans and some condos have different requirements.
FHA Loans
FHA allows as little as 3.5% down with a 580 or higher credit score. Putting 5% down on an FHA loan doesn't make its insurance work like conventional PMI. With less than 10% down, FHA's annual mortgage insurance generally lasts for the life of the loan. See my FHA home loans page.
VA Loans
Eligible veterans, service members and certain surviving spouses may buy with no down payment, subject to entitlement, lender and property requirements. VA loans have no monthly mortgage insurance, though a funding fee may apply unless you're exempt.
USDA Loans
USDA guaranteed loans may offer no-down-payment financing for eligible buyers in qualifying rural and suburban areas, with household income limits. See USDA-eligible areas near Charlotte.
Is 5% Down the Same as Your Cash to Close?
No. In addition to the down payment, you may need funds for:
Lender fees and other loan costs
Appraisal, title, attorney and recording charges
Prepaid homeowners insurance and interest
Initial escrow deposits for taxes and insurance
Inspections and other costs paid before closing
Your earnest money and any eligible credits reduce what you bring at closing. Keep money for moving, repairs and emergencies separate. See closing costs for buyers in NC and SC and how much money you need to buy a home.
Can Seller Credits Help?
A negotiated seller credit can cover eligible closing costs and prepaid expenses within the loan program's limits. On a conventional loan with less than 10% down, seller contributions are generally limited to 3% of the price. Seller credits can't be used toward your required down payment, and the seller has to agree to them.
Will You Have PMI With 5% Down?
On a conventional mortgage, generally yes. PMI protects the lender if the borrower defaults, and its cost depends on your credit score, loan-to-value ratio, loan amount and coverage. That's why I use an actual mortgage insurance quote instead of a generic calculator estimate.
When Can PMI Be Removed?
For most conventional loans with borrower-paid PMI:
You can request cancellation when your balance is scheduled to reach 80% of the home's original value
PMI generally ends automatically when the balance is scheduled to reach 78%, if your payments are current
Removal based on a higher home value follows separate servicer and investor rules
See how to remove PMI without refinancing.
Is It Better to Put Down 5% or More?
It depends on what changes in your loan comparison.
A smaller down payment keeps more cash in your pocket for moving, repairs or emergencies. But you borrow more, which generally means a higher principal and interest payment, and mortgage insurance adds to the difference.
A larger down payment reduces the amount borrowed and can lower mortgage insurance or improve pricing. But it doesn't guarantee a better rate, and using nearly all your savings leaves less flexibility after closing.
Compare the complete housing budget. For a home in Charlotte, Fort Mill, Rock Hill or elsewhere in the Carolinas, include property taxes, homeowners insurance, mortgage insurance, HOA dues and any flood insurance, then budget separately for maintenance and utilities. You can run your own numbers with my mortgage calculator.
Can You Use Gift Funds for the Down Payment?
Often, yes. Eligible gift funds can cover some or all of the down payment on many loans, depending on the program, property and donor. The lender will need a gift letter confirming repayment isn't expected, plus documentation of the transfer. Talk to me before moving the money. See using gift funds for a down payment.
What About Down Payment Assistance?
I offer down payment assistance through wholesale lender programs. It's usually a second mortgage that may be forgivable or repayable, depending on the program. Assistance can come with income limits, education requirements or conditions if you sell or refinance, so I compare the first mortgage, the assistance loan, the monthly payment and the total cash needed. See my first-time homebuyer programs guide.
Down Payment Mistakes to Avoid
Using every available dollar. Separate the money needed to close from the savings you want afterward.
Comparing only the interest rate. Review mortgage insurance, lender fees, credits and the full payment too.
Assuming more down guarantees approval. You still need acceptable income, credit, debts and property eligibility.
Counting on future appreciation or a refinance. Make sure the loan works under its current terms.
5% Down FAQs
Can I buy a house with 5% down if I'm not a first-time buyer?
Yes. Conventional 5% down options are available to repeat buyers purchasing a primary residence.
Do I have to pay PMI with 5% down?
On a conventional loan, usually yes. It can generally be canceled once your balance reaches 80% of the original value and ends automatically at 78%.
Is 5% down better than 3% or 3.5%?
Not always. Compare the payment, mortgage insurance, cash to close and the savings you keep under each option.
Can I use 5% down on an investment property?
Generally no. Investment properties usually require a larger down payment.
Can I put 5% down on a duplex?
Yes, with conventional financing on an eligible two- to four-unit property when you live in one unit.
How I Help You Compare Down Payment Options
We start with your timeline, available funds, comfortable payment and how much you want to keep in savings. Then I review your documents and prepare a side-by-side Total Cost Analysis showing:
Estimated cash needed at closing
Principal and interest, mortgage insurance and estimated property expenses
Loan costs and any credits
The savings you'd keep under each option
Already have a Loan Estimate from another lender? Send it to me and I'll review the costs and alternatives. You can read what past clients say on my reviews page.
Let's Find a Down Payment That Fits Your Plan
If you're buying in North Carolina or South Carolina, I can help you compare 5% down, a smaller eligible down payment or a larger one. We can talk by phone or video, or start with a pre-approval.
Schedule a mortgage consultation or start your mortgage application.
Paul Mattos
Mortgage Broker | Refine Mortgage
Carolina Home Financing
NMLS# 2339069 | Licensed in NC and SC
Call or text: 980-221-4959
Email: paulm@refinemortgage.net
Refine Mortgage Inc. | NMLS# 2417960 | Equal Housing Lender. This article provides general educational information and is not a commitment to lend, a rate quote, or an offer of specific credit terms. Eligibility, down payments, mortgage insurance, fees, and program availability vary by lender, loan program, borrower, and property. Approval, pricing, and program availability depend on credit, income, assets, property, appraisal, and underwriting requirements. Not all applicants will qualify. Refine Mortgage is not affiliated with HUD, the Department of Veterans Affairs, the USDA, or any other government agency.
