5% Down Conventional Home Loans in Washington State

Five percent down is one of the most practical entry points into homeownership in Washington. It asks less of your savings than a traditional 20% down payment, and unlike some low down payment programs, it is available to repeat buyers as well as first-time buyers.

I work with buyers across Seattle, Bellevue, Kirkland, Redmond, and the wider King and Snohomish County markets who want to know what 5% down actually looks like in practice. Here is how the program works, what it costs, and when it makes sense.

A conventional loan is a mortgage that is not insured by a government agency such as FHA, VA, or USDA. Conventional financing follows guidelines set by Fannie Mae and Freddie Mac, and those guidelines allow qualified buyers to purchase a primary residence with as little as 5% down.

On a $700,000 home, 5% down is $35,000. The remaining 95% is financed. Because you are financing more than 80% of the value, the loan will include private mortgage insurance until you reach enough equity to remove it.

In King County, the 2026 conforming loan limit for a one-unit property is $1,063,750. As long as your loan amount stays at or below that figure, you are in conforming conventional territory rather than jumbo.

Conventional 5% down financing generally works for buyers who have:

• A credit profile that meets conventional guidelines, with stronger credit producing better mortgage insurance pricing
• A debt-to-income ratio within program limits
• Documented, stable income, including salary, bonus, self-employment, and in many cases restricted stock
• Verified funds for the down payment and closing costs, which may include gift funds from an eligible source

Repeat buyers qualify. There is no requirement that this be your first home, which is one of the main differences between 5% down conventional financing and the 3% down programs aimed specifically at first-time buyers.

Any conventional loan with less than 20% down carries private mortgage insurance, commonly called PMI. PMI protects the lender, not you, and its cost depends on your credit profile, loan-to-value ratio, and the structure you choose.

PMI is not permanent. Under the Homeowners Protection Act, you can request cancellation once the loan balance reaches 80% of the original value, and the servicer must automatically terminate it at 78% on a primary residence, provided you are current on payments. In appreciating markets, some homeowners reach that threshold sooner than the original amortization schedule suggests.

There is more than one way to pay for PMI. Monthly PMI is the most common. Single-premium and lender-paid structures move the cost into the loan or the rate instead. Which one is cheaper depends on how long you expect to keep the loan, and that is worth modeling before you lock.

Against 3% down

Conventional 3% down programs exist, but they generally carry first-time buyer or income eligibility requirements. If you have owned before, 5% down is often the lowest conventional option available to you.

Against FHA

FHA requires 3.5% down and can be more forgiving on credit. The tradeoff is that FHA mortgage insurance usually stays for the life of the loan unless you refinance. For a buyer with solid credit, conventional 5% down often costs less over the time they actually hold the loan.

Against 10% or 20% down

More money down lowers both your payment and your mortgage insurance cost. It also drains reserves. In a market where a furnace, a roof, or a rate-and-term refinance may be in your near future, keeping cash available has real value.

Puget Sound prices mean the difference between 5% and 20% down is often six figures. For many buyers, waiting to save 20% means waiting through several years of price movement. Buying earlier with 5% down and removing PMI later is a legitimate strategy, and for a number of my clients it has been the better one.

It is not automatically the right call. If you are stretching your monthly payment to the edge in order to buy sooner, the lower down payment is solving the wrong problem. The question I walk through with buyers is not just what you can qualify for, but what payment you will still be comfortable with in year three.

Five percent down is a strong option for buyers who are ready to own but do not want to wait years to accumulate a larger down payment. The right structure depends on your credit, your timeline, and how much cash you want to keep working elsewhere.

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Private mortgage insurance requirements, cancellation terms, and program eligibility are subject to investor guidelines and individual qualification. Loan limits shown reflect 2026 King County, WA one-unit conforming limits. All loans subject to credit and property approval. Not all applicants will qualify.