Conventional Mortgage
5% Downpayment
(95% Financing)
Mental Map - Where Conventional 5% Fits

The 5% down payment program is a popular Conventional financing option. As a low downpayment option, it offers competitive pricing. That makes it a worthy comparison for many people considering an FHA Mortgage.

Advantages and Strengths of Conventional 5% Down Payment

  • Favorable pricing with high credit scores. The Conventional 5% is highly credit score sensitive in two areas. Credit scores impact (1) the entire scale of rates-costs and (2) the cost of PMI. The top tier for PMI is 760 and above. When your credit score is in this range, you'll likely receive much lower overall costs on Conventional rather than FHA.

  • Condominiums. Although not all lenders allow it, Conventional allows 95% financing on condominiums. We do condo financing up to the full 95% amount. We also do 97% financing through two special programs -- Conventional 97% and HomeReady.

    Compared with FHA, Conventional works much more often for Condominiums. That's because FHA has only approved a small percentage of associations.

  • PMI can be temporary. When you reach 20% or 22% equity (depending on which set of procedures you follow), it's possible to eliminate the PMI. That's an advantage over FHA financing which has permanent PMI.

  • The downpayment can come from a gift. Five percent is a low down payment to start with, and it can come from a gift!

  • The downpayment can be borrowed from a 401k or retirement account. You're able to use secured borrowed funds such as a 401k loan. 

  • The sellers can pay closing costs and prepaids.  This is something you would need to negotiate in your purchase contract with the seller. 

  • Fast, in-house underwriting. We underwrite Conventional loans in-house with an efficient process. This is also true for most FHA, VA, and USDA loans.

Downsides: Where Conventional 5% Down Payment is Less Friendly

  • Not for multi-family properties.  The minimum downpayment on Conventional for a two-family property (duplex) is 15%. For three- and four-units, it's even higher. If you need a lower downpayment for a multi-family, check out FHA

  • Not for second homes or investment properties. The minimum downpayment for a second home is 10% while minimum payment for an investment property is 20-25%. 

  • For people qualified for a more specialized program (like HomeReady VA, USDA). If you qualify for a special program such as HomeReady (moderate income caps), VA Home Loans (as a veteran or service member) or USDA (for rural areas), you should see those programs.

  • Low credit score. With a low credit score, Conventional is more expensive both in terms of its rate/cost options and also PMI. People with credit scores under 700 typically prefer FHA.

  • Borrowers that need extra flexibility. Conventional has rigid guidelines in key areas including credit, assets, and debt-to-income ratio. Borrowers who need more flexibility often opt for FHA loans.

  • Not below 620 credit score. Conventional has a minimum credit score of 620. Again, borrowers with lower scores often opt for FHA.

  • Long waiting periods after derogatory events. If you had a past bankruptcy, short sale, or foreclosure, Conventional requires significant waiting periods before you can qualify again for Conventional financing. See the Waiting Period Chart.

Pre-Approval for Conventional Financing

If you'd like a pre-approval, you do not need to choose a program first. We'd be happy to help you explore. When you're interested in pre-approval, complete the information at Get Started Online.

What Options to Compare with Conventional 5% Down

  • If you can "swing it", compare 10% down.  If you have additional assets, or if you may receive gift funds, consider the next downpayment level. The main difference will likely be the cost of Private Mortgage Insurance (PMI). It may make it worth stretching a little bit to reach the 10% down level. Learn how to reduce PMI with 10% down.

  • If you earn low- to moderate- income, check out HomeReady. This is a conventional program with options for 3% down or 5% down and favorable pricing. If you and a spouse earn more than the allowable income, it may be possible to count just one of your incomes.

  • Compare 30-year vs. 20-year term. The 20-year term will give you an advantage on PMI cost. Not only would you pay a lower rate on PMI, but you could eliminate it more quickly, compared to the 30-year.

  • Compare Conventional 5% vs. FHA. Because Conventional is so credit score sensitive, people with exceptional scores often prefer Conventional. People with lower scores often get a better overall deal on FHA. But there's a lot of grey area in-between. It's worth comparing you so you choose what works best for you.

  • Special programs. If you qualify for any special programs such as VA Home Loans (for military people) or USDA Home Loans (for rural home buyers), make sure to check out those special options.

  • Compare high cost vs. low cost. The rates on Conventional exist on a scale. You can match a lower rate with a higher cost -- or a higher rate with a lower cost -- or options in-between. The biggest factor in determining the ideal option is usually the time you plan to keep the home and mortgage. We can help you compare.

Don't worry about trying to understand all of these options by yourself! We will help identify relevant options and make it easy for you when you get in touch through Get Started Online.

What's the Lowest Down Payment for Conventional?

Traditionally, the 5% down program is Conventional's lowest down payment option. However, there are two special conventional programs that offer 3% down payment  --


  1. HomeReady 3% down, is for low- to moderate-income borrowers and features favorable pricing.

  2. Conventional 3% down, is for first-time homebuyers only, but it's much worse in pricing.

Let's Work Together!

As you can see, we're very straightforward about the pros and cons of each program. Let's discuss your personal situation so that we can weigh the options that could be the best fit for you. We'll make it very easy to compare your options.

Unlike banks and credit unions, our business and reputation depend completely on the experience of mortgage customers. We'll closely walk with you from the beginning to end. I'd love to get to know you!

On top of that, we'll give you distinct advantages to stand out from other buyers, to provide more confidence to sellers, and to get your offer accepted. Not only does our reputation carry weight in the local real estate community, but our VIP FasTrak can provide a bona fide head start. With this, you'll stand out as a more reliable buyer, and you'll be able to close faster than 95% of other buyers applying for a mortgage.

If you're searching for a home within the next three months, your first step is to complete the information at Get Started Online.

Thanks for the Info! What's My Next Step?

Let's prepare for your home purchase and explore options together! Your next step depends on your timing...

  • If you'd like to purchase a home within the next three months, head over to our Get Started Online page. Take some time to fill in the information. That's the first step for us to get to know you and start to identify relevant options.

  • If you're beyond three months away (or outside Wisconsin), use one of the contact forms below.

Yes! Please help me plan and prepare! I'm beyond three months away. So please get in touch at your convenience!

I'm outside of the great state of Wisconsin, but please put me in touch with a colleague who serves my area!

Greg Schliesmann
Branch Manager, NMLS# 234288
Cherry Creek Mortgage Co., Inc

Greg Schliesmann
Branch Manager, NMLS# 234288
Cherry Creek Mortgage Co., Inc

1033 N Mayfair Rd, Suite 100
Wauwatosa, WI 53226

Tel: 414-617-1756

1033 N Mayfair Rd, Suite 100
Wauwatosa, WI 53226

Tel: 414-617-1756

Free Access to Greg's Valuable Video Series

Five Strategies to Stand Out from Homebuyer Competition and Get Your Offer Accepted!

Free Access to Greg's Valuable Video Series

Five Strategies to Stand Out from Homebuyer Competition and Get Your Offer Accepted!

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Copyright ©2018 Cherry Creek Mortgage Company & Greg Schliesmann for CCMC, Inc.

Cherry Creek Mortgage Co., Inc. NMLS #3001. All Rights Reserved. Some loan products may not be available in all states. Terms, rates, and fees subject to change. Please speak with one of our loan originators for more detail.