Physical Address

304 North Cardinal St.
Dorchester Center, MA 02124

What is a 5 Mortgage?

Buying a house comes with certain expenditures on your side, depending on the property you wish to purchase. Still, many lenders offer different down payments and criteria. If you wish to know what is 5 mortgage, we will explain it to you and, most importantly, show you where you can find this type of mortgage. 

So what is 5 mortgage? A 5 mortgage is a type of mortgage where you need to provide a 5% down payment for the property you wish to purchase. This means the lender will cover 95% of the total loan, and your principal will be 95% of the home value. This type of mortgage doesn’t exist in the US.

House with attached garage

Still, even though this particular mortgage doesn’t exist in the US, we will show you some other mortgages you can take that come with similar conditions and prices.

Let’s Start by Explaining What Is 5 Mortgage Government Deposit Scheme

So, we already explained that 5 mortgages are the ones where you give only a 5% deposit or down payment of your house’s total value. Typically, these kinds of mortgages are available in the UK, and these loans are government-supported. Also, 5 mortgages are sometimes referred to as 95% mortgages because you only pay 5% of your home value upfront. That being said, let’s explain some pros and cons of mortgages with low down payment:


  • You don’t need to have a large amount of money up front to buy a house,
  • You will be able to purchase your dream house sooner,
  • Usually, you can fix your payments for the next five years.


  • Your interest rates will be higher,
  • There will be a higher risk of negative equity,
  • It may be harder to be accepted by a lender,
  • You may be at risk of not being able to pay it off.

There Are Plenty of Government Loans You Can Take In the US for Low Deposit

When applying for a mortgage, knowing when is the best time to apply is one of the crucial elements in finding a good deal. But knowing what your expenditures, interest rates, and down payment will be is by far the most important part. Aside from the down payment, you will have to pay for mortgage insurance premiums, fees and closing costs, and more. This is why getting a mortgage is hard for so many young people, especially if they have low FICO score lenders will check.

Fortunately, there are plenty of US government-backed loans for people who don’t have enough funds to pay for large down payments. Most of these loans are supported by three government agencies: the Federal Housing Administration (FHA,) the Department of Veterans Affairs (VA,) and the US Department of Agriculture (USDA). The main thing you need to know about these loans is that the backing agency ensures the loan amount protecting the lender if payments are not made.  

Types of Government-Backed Loans

As three agencies are backing up these loans, there are three loans you can apply to. Keep in mind that you may not get approval for a mortgage from all of them. So before you apply, read the rules and criteria and see if you are eligible or not. Also, most lenders will have all of these loans or some available so make sure you learn all about your lender before applying, or just hire a mortgage broker to do this kind of research for you. Take a look at three types of government-backed loans and their characteristics.

RequirementsFHA LoansUSDA LoansVA Loans
Down payment3.5%.No down payments.No down payments.
Mortgage insuranceUpfront premium of 1.75% plus an annual premium of 0.45% to 1.05%.An upfront mortgage insurance premium is 1%, annual is 0.35%.No mortgage insurance.
FICO Score580 or higher.At least 640 or more620 or more
Who can apply forEveryone.People who are buying a home in a rural or eligible suburban area.Active-duty service member, a veteran, an eligible spouse of a veteran.

The Best Conventional Mortgage With a Low Deposit

Only when you start searching for lenders and the best loans do you come to realize that many of them offer low down payments for the loans that are not under government insurance. Still, not everyone is eligible for these loans, and maybe not all lenders will make you a fair offer. On the one hand, you may get to pay low deposits but enormously big interest rates. So make sure you read all the fine print before you sign anything. Take a look at the top-rated lenders with low down payments.

Name of the lenderDown paymentMin. credit scoreRate
Rocket Mortgage3%620Low mortgage rates but high lenders fees.
Citibank Mortgage3%National averageAdjustibile
New American Funding3%620Fixed interest rates but high lenders fees
SoFi3%620 Low mortgage rates
Alliant3% or no down paymentNational averagefixed- and adjustable-rate loans
But offer first home buyers programs.

The US Is Still the Leader in Mortgage Options

There is no doubt that, when it comes to homeownership and home buying, Americans are leaders in the world. And as you can see, even though there are no 5 mortgages per se, there are even better options you can choose from. Still, like any service on the market, you need to find the one perfect for you, so you don’t end up paying more than you need to. But if you do your research in a proper manner and find a good advisor, you will be able to have your own home as soon as you leave your parents’ house. And frankly, that’s something people in many countries can not achieve easily.